Correlation Between Hisense Home and Ameriprise Financial

Can any of the company-specific risk be diversified away by investing in both Hisense Home and Ameriprise Financial 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 Hisense Home and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hisense Home and Ameriprise Financial

-0.69

Correlation Coefficient

Hisense Home  Ameriprise Financial

Excellent diversification

The 3 months correlation between Hisense and Ameriprise is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Hisense Home 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 Hisense Home Appliances are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Hisense Home i.e., Hisense Home and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Hisense Home and Ameriprise Financial

Assuming the 90 days horizon Hisense Home Appliances is expected to generate 2.79 times more return on investment than Ameriprise Financial. However, Hisense Home is 2.79 times more volatile than Ameriprise Financial. It trades about 0.09 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.08 per unit of risk. If you would invest  63.00  in Hisense Home Appliances on October 4, 2024 and sell it today you would earn a total of  238.00  from holding Hisense Home Appliances or generate 377.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hisense Home Appliances  vs.  Ameriprise Financial

Hisense Home Appliances

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hisense Home Appliances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ameriprise Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisense Home and Ameriprise Financial

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

The idea behind Hisense Home Appliances and Ameriprise Financial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.