Correlation Between Viomi Technology and SEB SA

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

Diversification Opportunities for Viomi Technology and SEB SA

0.13

Correlation Coefficient

Viomi Technology  SEB SA

Average diversification

The 3 months correlation between Viomi and SEB is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Viomi Technology ADR and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 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 Viomi Technology i.e., Viomi Technology and SEB SA go up and down completely randomly.

Pair Corralation between Viomi Technology and SEB SA

Given the investment horizon of 90 days Viomi Technology ADR is expected to generate 4.48 times more return on investment than SEB SA. However, Viomi Technology is 4.48 times more volatile than SEB SA. It trades about 0.11 of its potential returns per unit of risk. SEB SA is currently generating about 0.11 per unit of risk. If you would invest  137.00  in Viomi Technology ADR on December 27, 2024 and sell it today you would earn a total of  51.00  from holding Viomi Technology ADR or generate 37.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.0%
Values	Daily Returns

Viomi Technology ADR  vs.  SEB SA

Viomi Technology ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viomi Technology ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viomi Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

SEB SA

Risk-Adjusted Performance

Modest

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 conflicting basic indicators, SEB SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Viomi Technology and SEB SA

The main advantage of trading using opposite Viomi Technology and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viomi Technology 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 Viomi Technology ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.