Correlation Between UDR and Haier Smart

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

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

Diversification Opportunities for UDR and Haier Smart

-0.35

Correlation Coefficient

UDR  Haier Smart

Very good diversification

The 3 months correlation between UDR and Haier is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc 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 UDR 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 UDR Inc 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 UDR i.e., UDR and Haier Smart go up and down completely randomly.

Pair Corralation between UDR and Haier Smart

Considering the 90-day investment horizon UDR Inc is expected to generate 0.59 times more return on investment than Haier Smart. However, UDR Inc is 1.7 times less risky than Haier Smart. It trades about 0.33 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.17 per unit of risk. If you would invest  4,219  in UDR Inc on September 1, 2024 and sell it today you would earn a total of  367.00  from holding UDR Inc or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

UDR Inc  vs.  Haier Smart Home

UDR Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Haier Smart Home

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haier Smart Home are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Haier Smart may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with UDR and Haier Smart

The main advantage of trading using opposite UDR and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR 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 UDR Inc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.