Correlation Between Crown Crafts and Viomi Technology

Can any of the company-specific risk be diversified away by investing in both Crown Crafts and Viomi Technology 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 Crown Crafts and Viomi Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crown Crafts and Viomi Technology ADR, you can compare the effects of market volatilities on Crown Crafts and Viomi Technology 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 Crown Crafts with a short position of Viomi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Crafts and Viomi Technology.

Diversification Opportunities for Crown Crafts and Viomi Technology

-0.39

Correlation Coefficient

Crown Crafts  Viomi Technology

Very good diversification

The 3 months correlation between Crown and Viomi is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Crown Crafts and Viomi Technology ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viomi Technology ADR and Crown Crafts 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 Crown Crafts are associated (or correlated) with Viomi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viomi Technology ADR has no effect on the direction of Crown Crafts i.e., Crown Crafts and Viomi Technology go up and down completely randomly.

Pair Corralation between Crown Crafts and Viomi Technology

Given the investment horizon of 90 days Crown Crafts is expected to under-perform the Viomi Technology. But the stock apears to be less risky and, when comparing its historical volatility, Crown Crafts is 3.4 times less risky than Viomi Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Viomi Technology ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Viomi Technology ADR on December 3, 2024 and sell it today you would earn a total of  50.00  from holding Viomi Technology ADR or generate 47.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Crown Crafts  vs.  Viomi Technology ADR

Crown Crafts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Crafts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Viomi Technology ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Viomi Technology ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Viomi Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crown Crafts and Viomi Technology

The main advantage of trading using opposite Crown Crafts and Viomi Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Crafts position performs unexpectedly, Viomi Technology 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 Viomi Technology will offset losses from the drop in Viomi Technology's long position.

The idea behind Crown Crafts and Viomi Technology ADR 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.