Correlation Between TPX Old and Haier Smart

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

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

Diversification Opportunities for TPX Old and Haier Smart

0.24

Correlation Coefficient

TPX Old  Haier Smart

Modest diversification

The 3 months correlation between TPX and Haier is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding TPX Old and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and TPX Old 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 TPX Old are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of TPX Old i.e., TPX Old and Haier Smart go up and down completely randomly.

Pair Corralation between TPX Old and Haier Smart

Considering the 90-day investment horizon TPX Old is expected to generate 0.82 times more return on investment than Haier Smart. However, TPX Old is 1.22 times less risky than Haier Smart. It trades about 0.31 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.0 per unit of risk. If you would invest  5,698  in TPX Old on December 28, 2024 and sell it today you would earn a total of  1,180  from holding TPX Old or generate 20.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.0%
Values	Daily Returns

TPX Old  vs.  Haier Smart Home

TPX Old

Risk-Adjusted Performance

Solid

Over the last 90 days TPX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, TPX Old showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TPX Old and Haier Smart

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

The idea behind TPX Old and Haier Smart Home 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.