Correlation Between Hisense Home and URBAN OUTFITTERS
Can any of the company-specific risk be diversified away by investing in both Hisense Home and URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS, you can compare the effects of market volatilities on Hisense Home and URBAN OUTFITTERS 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 URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and URBAN OUTFITTERS.
Diversification Opportunities for Hisense Home and URBAN OUTFITTERS
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hisense and URBAN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of Hisense Home i.e., Hisense Home and URBAN OUTFITTERS go up and down completely randomly.
Pair Corralation between Hisense Home and URBAN OUTFITTERS
Assuming the 90 days horizon Hisense Home is expected to generate 2.85 times less return on investment than URBAN OUTFITTERS. But when comparing it to its historical volatility, Hisense Home Appliances is 1.3 times less risky than URBAN OUTFITTERS. It trades about 0.09 of its potential returns per unit of risk. URBAN OUTFITTERS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,640 in URBAN OUTFITTERS on November 15, 2024 and sell it today you would earn a total of 1,610 from holding URBAN OUTFITTERS or generate 44.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hisense Home Appliances vs. URBAN OUTFITTERS
Performance |
Timeline |
Hisense Home Appliances |
URBAN OUTFITTERS |
Hisense Home and URBAN OUTFITTERS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hisense Home and URBAN OUTFITTERS
The main advantage of trading using opposite Hisense Home and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.Hisense Home vs. ARDAGH METAL PACDL 0001 | ||
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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