Correlation Between National Beverage and Haier Smart
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Haier Smart Home, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Haier Smart.
Diversification Opportunities for National Beverage and Haier Smart
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Haier is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Haier Smart go up and down completely randomly.
Pair Corralation between National Beverage and Haier Smart
Assuming the 90 days horizon National Beverage is expected to generate 3.74 times less return on investment than Haier Smart. In addition to that, National Beverage is 1.08 times more volatile than Haier Smart Home. It trades about 0.03 of its total potential returns per unit of risk. Haier Smart Home is currently generating about 0.13 per unit of volatility. If you would invest 103.00 in Haier Smart Home on September 3, 2024 and sell it today you would earn a total of 73.00 from holding Haier Smart Home or generate 70.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Haier Smart Home
Performance |
| Timeline |
| National Beverage Corp |
| Haier Smart Home |
National Beverage and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Haier Smart
The main advantage of trading using opposite National Beverage and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. HK Electric Investments | National Beverage vs. United Utilities Group | National Beverage vs. United Internet AG | National Beverage vs. WisdomTree Investments |
| Haier Smart vs. Sixt Leasing SE | Haier Smart vs. ALGOMA STEEL GROUP | Haier Smart vs. Tianjin Capital Environmental | Haier Smart vs. Perma Fix Environmental Services |
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.
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