Correlation Between SYSTEMAIR and Qingdao Haier
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and Qingdao Haier 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 SYSTEMAIR and Qingdao Haier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Qingdao Haier Co, you can compare the effects of market volatilities on SYSTEMAIR and Qingdao Haier 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 SYSTEMAIR with a short position of Qingdao Haier. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Qingdao Haier.
Diversification Opportunities for SYSTEMAIR and Qingdao Haier
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SYSTEMAIR and Qingdao is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Qingdao Haier Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Haier and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with Qingdao Haier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Haier has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Qingdao Haier go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Qingdao Haier
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 1.43 times more return on investment than Qingdao Haier. However, SYSTEMAIR is 1.43 times more volatile than Qingdao Haier Co. It trades about 0.1 of its potential returns per unit of risk. Qingdao Haier Co is currently generating about 0.06 per unit of risk. If you would invest 760.00 in SYSTEMAIR AB on September 14, 2024 and sell it today you would earn a total of 45.00 from holding SYSTEMAIR AB or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. Qingdao Haier Co
Performance |
| Timeline |
| SYSTEMAIR AB |
| Qingdao Haier |
SYSTEMAIR and Qingdao Haier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Qingdao Haier
The main advantage of trading using opposite SYSTEMAIR and Qingdao Haier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, Qingdao Haier 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 Qingdao Haier will offset losses from the drop in Qingdao Haier's long position.The idea behind SYSTEMAIR AB and Qingdao Haier Co 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.| Qingdao Haier vs. Corsair Gaming | Qingdao Haier vs. SYSTEMAIR AB | Qingdao Haier vs. DELTA AIR LINES | Qingdao Haier vs. INTER CARS SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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