Correlation Between Hisense Home and Canadian Imperial

Can any of the company-specific risk be diversified away by investing in both Hisense Home and Canadian Imperial 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 Canadian Imperial 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 Canadian Imperial Bank, you can compare the effects of market volatilities on Hisense Home and Canadian Imperial 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 Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and Canadian Imperial.

Diversification Opportunities for Hisense Home and Canadian Imperial

-0.69

Correlation Coefficient

Hisense Home  Canadian Imperial

Excellent diversification

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

Pair Corralation between Hisense Home and Canadian Imperial

Assuming the 90 days horizon Hisense Home Appliances is expected to generate 2.53 times more return on investment than Canadian Imperial. However, Hisense Home is 2.53 times more volatile than Canadian Imperial Bank. It trades about 0.11 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.06 per unit of risk. If you would invest  296.00  in Hisense Home Appliances on October 10, 2024 and sell it today you would earn a total of  34.00  from holding Hisense Home Appliances or generate 11.49% 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.  Canadian Imperial Bank

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 nearly stable basic indicators, Hisense Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Canadian Imperial Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Canadian Imperial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisense Home and Canadian Imperial

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

The idea behind Hisense Home Appliances and Canadian Imperial Bank 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .