Correlation Between Haier Smart and VPower Group
Can any of the company-specific risk be diversified away by investing in both Haier Smart and VPower Group 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 Haier Smart and VPower Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and VPower Group International, you can compare the effects of market volatilities on Haier Smart and VPower Group 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 Haier Smart with a short position of VPower Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and VPower Group.
Diversification Opportunities for Haier Smart and VPower Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Haier and VPower is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and VPower Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VPower Group Interna and Haier Smart 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 Haier Smart Home are associated (or correlated) with VPower Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VPower Group Interna has no effect on the direction of Haier Smart i.e., Haier Smart and VPower Group go up and down completely randomly.
Pair Corralation between Haier Smart and VPower Group
Assuming the 90 days trading horizon Haier Smart is expected to generate 8.64 times less return on investment than VPower Group. But when comparing it to its historical volatility, Haier Smart Home is 11.08 times less risky than VPower Group. It trades about 0.09 of its potential returns per unit of risk. VPower Group International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.15 in VPower Group International on November 7, 2024 and sell it today you would lose (0.65) from holding VPower Group International or give up 30.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. VPower Group International
Performance |
| Timeline |
| Haier Smart Home |
| VPower Group Interna |
Haier Smart and VPower Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and VPower Group
The main advantage of trading using opposite Haier Smart and VPower Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, VPower Group 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 VPower Group will offset losses from the drop in VPower Group's long position.| Haier Smart vs. Pentair plc | Haier Smart vs. MTY Food Group | Haier Smart vs. Air New Zealand | Haier Smart vs. ALTAIR RES INC |
| VPower Group vs. ALBIS LEASING AG | VPower Group vs. WILLIS LEASE FIN | VPower Group vs. ETFS Coffee ETC | VPower Group vs. JAPAN AIRLINES |
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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