Correlation Between Viomi Technology and Haier Smart

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

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

Diversification Opportunities for Viomi Technology and Haier Smart

-0.59

Correlation Coefficient

Viomi Technology  Haier Smart

Excellent diversification

The 3 months correlation between Viomi and Haier is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Viomi Technology ADR 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 Viomi Technology 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 Viomi Technology ADR 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 Viomi Technology i.e., Viomi Technology and Haier Smart go up and down completely randomly.

Pair Corralation between Viomi Technology and Haier Smart

Given the investment horizon of 90 days Viomi Technology ADR is expected to generate 1.01 times more return on investment than Haier Smart. However, Viomi Technology is 1.01 times more volatile than Haier Smart Home. It trades about 0.02 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  159.00  in Viomi Technology ADR on December 2, 2024 and sell it today you would lose (3.00) from holding Viomi Technology ADR or give up 1.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Viomi Technology ADR  vs.  Haier Smart Home

Viomi Technology ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Viomi Technology ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Viomi Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Viomi Technology and Haier Smart

The main advantage of trading using opposite Viomi Technology and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viomi Technology 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 Viomi Technology ADR 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.