Correlation Between Haier Smart and FGI Industries

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

By analyzing existing cross correlation between Haier Smart Home and FGI Industries, you can compare the effects of market volatilities on Haier Smart and FGI Industries 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 Haier Smart with a short position of FGI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and FGI Industries.

Diversification Opportunities for Haier Smart and FGI Industries

-0.33

Correlation Coefficient

Haier Smart  FGI Industries

Very good diversification

The 3 months correlation between Haier and FGI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and FGI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FGI Industries and Haier Smart 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 Haier Smart Home are associated (or correlated) with FGI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FGI Industries has no effect on the direction of Haier Smart i.e., Haier Smart and FGI Industries go up and down completely randomly.

Pair Corralation between Haier Smart and FGI Industries

Assuming the 90 days horizon Haier Smart Home is expected to under-perform the FGI Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Haier Smart Home is 1.6 times less risky than FGI Industries. The pink sheet trades about -0.02 of its potential returns per unit of risk. The FGI Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  82.00  in FGI Industries on December 26, 2024 and sell it today you would earn a total of  2.00  from holding FGI Industries or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Haier Smart Home  vs.  FGI Industries

Haier Smart Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haier Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Haier Smart is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

FGI Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FGI Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, FGI Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Haier Smart and FGI Industries

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

The idea behind Haier Smart Home and FGI Industries 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.