Correlation Between Hesai Group and Linamar

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

By analyzing existing cross correlation between Hesai Group American and Linamar, you can compare the effects of market volatilities on Hesai Group and Linamar 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 Hesai Group with a short position of Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hesai Group and Linamar.

Diversification Opportunities for Hesai Group and Linamar

-0.05

Correlation Coefficient

Hesai Group  Linamar

Good diversification

The 3 months correlation between Hesai and Linamar is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hesai Group American and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and Hesai Group 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 Hesai Group American are associated (or correlated) with Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Hesai Group i.e., Hesai Group and Linamar go up and down completely randomly.

Pair Corralation between Hesai Group and Linamar

Given the investment horizon of 90 days Hesai Group American is expected to generate 4.25 times more return on investment than Linamar. However, Hesai Group is 4.25 times more volatile than Linamar. It trades about 0.2 of its potential returns per unit of risk. Linamar is currently generating about -0.04 per unit of risk. If you would invest  388.00  in Hesai Group American on September 2, 2024 and sell it today you would earn a total of  430.00  from holding Hesai Group American or generate 110.82% return on investment over 90 days.

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

Hesai Group American  vs.  Linamar

Hesai Group American

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Linamar

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hesai Group and Linamar

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

The idea behind Hesai Group American and Linamar 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.