Correlation Between Haier Smart and Apple
Can any of the company-specific risk be diversified away by investing in both Haier Smart and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Haier Smart and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and Apple.
Diversification Opportunities for Haier Smart and Apple
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Haier and Apple is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Haier Smart i.e., Haier Smart and Apple go up and down completely randomly.
Pair Corralation between Haier Smart and Apple
Assuming the 90 days trading horizon Haier Smart is expected to generate 1.25 times less return on investment than Apple. In addition to that, Haier Smart is 1.9 times more volatile than Apple Inc. It trades about 0.11 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.26 per unit of volatility. If you would invest 20,346 in Apple Inc on September 21, 2024 and sell it today you would earn a total of 4,004 from holding Apple Inc or generate 19.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Haier Smart Home vs. Apple Inc
Performance |
| Timeline |
| Haier Smart Home |
| Apple Inc |
Haier Smart and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and Apple
The main advantage of trading using opposite Haier Smart and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Haier Smart vs. New Residential Investment | Haier Smart vs. Warner Music Group | Haier Smart vs. SLR Investment Corp | Haier Smart vs. LPKF Laser Electronics |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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