Correlation Between Haier Smart and ASPEN TECHINC

Can any of the company-specific risk be diversified away by investing in both Haier Smart and ASPEN TECHINC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Haier Smart and ASPEN TECHINC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haier Smart Home and ASPEN TECHINC DL, you can compare the effects of market volatilities on Haier Smart and ASPEN TECHINC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Haier Smart with a short position of ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and ASPEN TECHINC.

Diversification Opportunities for Haier Smart and ASPEN TECHINC

0.54

Correlation Coefficient

Haier Smart  ASPEN TECHINC

Very weak diversification

The 3 months correlation between Haier and ASPEN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL and Haier Smart is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Haier Smart Home are associated (or correlated) with ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of Haier Smart i.e., Haier Smart and ASPEN TECHINC go up and down completely randomly.

Pair Corralation between Haier Smart and ASPEN TECHINC

Assuming the 90 days trading horizon Haier Smart Home is expected to generate 1.21 times more return on investment than ASPEN TECHINC. However, Haier Smart is 1.21 times more volatile than ASPEN TECHINC DL. It trades about 0.08 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.03 per unit of risk. If you would invest  180.00  in Haier Smart Home on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Haier Smart Home or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

Haier Smart Home  vs.  ASPEN TECHINC DL

Haier Smart Home

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haier Smart Home are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Haier Smart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ASPEN TECHINC DL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ASPEN TECHINC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Haier Smart and ASPEN TECHINC

The main advantage of trading using opposite Haier Smart and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, ASPEN TECHINC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.

The idea behind Haier Smart Home and ASPEN TECHINC DL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.