Correlation Between Haier Smart and SEB SA

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

Diversification Opportunities for Haier Smart and SEB SA

-0.45

Correlation Coefficient

Haier Smart  SEB SA

Very good diversification

The 3 months correlation between Haier and SEB is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Haier Smart i.e., Haier Smart and SEB SA go up and down completely randomly.

Pair Corralation between Haier Smart and SEB SA

Assuming the 90 days horizon Haier Smart Home is expected to under-perform the SEB SA. In addition to that, Haier Smart is 3.14 times more volatile than SEB SA. It trades about 0.0 of its total potential returns per unit of risk. SEB SA is currently generating about 0.11 per unit of volatility. If you would invest  8,620  in SEB SA on December 28, 2024 and sell it today you would earn a total of  618.00  from holding SEB SA or generate 7.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.49%
Values	Daily Returns

Haier Smart Home  vs.  SEB SA

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. Despite nearly stable fundamental indicators, Haier Smart is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SEB SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEB SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SEB SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Haier Smart and SEB SA

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

The idea behind Haier Smart Home and SEB SA 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.