Correlation Between Haier Smart and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both Haier Smart and LANDSEA HOMES 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 LANDSEA HOMES 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 LANDSEA HOMES P, you can compare the effects of market volatilities on Haier Smart and LANDSEA HOMES 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 LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and LANDSEA HOMES.
Diversification Opportunities for Haier Smart and LANDSEA HOMES
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Haier and LANDSEA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of Haier Smart i.e., Haier Smart and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between Haier Smart and LANDSEA HOMES
Assuming the 90 days trading horizon Haier Smart Home is expected to under-perform the LANDSEA HOMES. But the stock apears to be less risky and, when comparing its historical volatility, Haier Smart Home is 2.48 times less risky than LANDSEA HOMES. The stock trades about -0.01 of its potential returns per unit of risk. The LANDSEA HOMES P is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 940.00 in LANDSEA HOMES P on September 1, 2024 and sell it today you would earn a total of 140.00 from holding LANDSEA HOMES P or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Haier Smart Home vs. LANDSEA HOMES P
Performance |
| Timeline |
| Haier Smart Home |
| LANDSEA HOMES P |
Haier Smart and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and LANDSEA HOMES
The main advantage of trading using opposite Haier Smart and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, LANDSEA HOMES 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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