Correlation Between Flexsteel Industries and Haier Smart

Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and Haier Smart 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 Flexsteel Industries and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flexsteel Industries and Haier Smart Home, you can compare the effects of market volatilities on Flexsteel Industries and Haier Smart 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 Flexsteel Industries with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Haier Smart.

Diversification Opportunities for Flexsteel Industries and Haier Smart

0.63

Correlation Coefficient

Flexsteel Industries  Haier Smart

Poor diversification

The 3 months correlation between Flexsteel and Haier is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Haier Smart go up and down completely randomly.

Pair Corralation between Flexsteel Industries and Haier Smart

Given the investment horizon of 90 days Flexsteel Industries is expected to under-perform the Haier Smart. But the stock apears to be less risky and, when comparing its historical volatility, Flexsteel Industries is 1.01 times less risky than Haier Smart. The stock trades about -0.1 of its potential returns per unit of risk. The Haier Smart Home is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Haier Smart Home on December 29, 2024 and sell it today you would lose (16.00) from holding Haier Smart Home or give up 9.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Flexsteel Industries  vs.  Haier Smart Home

Flexsteel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flexsteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Haier Smart Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haier Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Haier Smart is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Flexsteel Industries and Haier Smart

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

The idea behind Flexsteel Industries and Haier Smart Home 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.