Correlation Between Hamilton Beach and Viomi Technology

Can any of the company-specific risk be diversified away by investing in both Hamilton Beach and Viomi Technology 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 Hamilton Beach and Viomi Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hamilton Beach Brands and Viomi Technology ADR, you can compare the effects of market volatilities on Hamilton Beach and Viomi Technology 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 Hamilton Beach with a short position of Viomi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Beach and Viomi Technology.

Diversification Opportunities for Hamilton Beach and Viomi Technology

0.69

Correlation Coefficient

Hamilton Beach  Viomi Technology

Poor diversification

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

Pair Corralation between Hamilton Beach and Viomi Technology

Considering the 90-day investment horizon Hamilton Beach is expected to generate 1.99 times less return on investment than Viomi Technology. But when comparing it to its historical volatility, Hamilton Beach Brands is 2.37 times less risky than Viomi Technology. It trades about 0.11 of its potential returns per unit of risk. Viomi Technology ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Viomi Technology ADR on December 28, 2024 and sell it today you would earn a total of  43.00  from holding Viomi Technology ADR or generate 29.66% return on investment over 90 days.

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

Hamilton Beach Brands  vs.  Viomi Technology ADR

Hamilton Beach Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

Viomi Technology ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viomi Technology ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viomi Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Beach and Viomi Technology

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

The idea behind Hamilton Beach Brands and Viomi Technology ADR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.