Correlation Between Hisense Home and Xcel Energy

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

Diversification Opportunities for Hisense Home and Xcel Energy

0.0

Correlation Coefficient

Hisense Home  Xcel Energy

Pay attention - limited upside

The 3 months correlation between Hisense and Xcel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of Hisense Home i.e., Hisense Home and Xcel Energy go up and down completely randomly.

Pair Corralation between Hisense Home and Xcel Energy

If you would invest  64.00  in Hisense Home Appliances on October 25, 2024 and sell it today you would earn a total of  268.00  from holding Hisense Home Appliances or generate 418.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hisense Home Appliances  vs.  Xcel Energy

Hisense Home Appliances

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisense Home Appliances are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hisense Home reported solid returns over the last few months and may actually be approaching a breakup point.

Xcel Energy

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Hisense Home and Xcel Energy

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

The idea behind Hisense Home Appliances and Xcel Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.