Correlation Between Haier Smart and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Haier Smart and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on Haier Smart and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and DFS Furniture.
Diversification Opportunities for Haier Smart and DFS Furniture
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Haier and DFS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Haier Smart i.e., Haier Smart and DFS Furniture go up and down completely randomly.
Pair Corralation between Haier Smart and DFS Furniture
Assuming the 90 days trading horizon Haier Smart Home is expected to under-perform the DFS Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Haier Smart Home is 1.46 times less risky than DFS Furniture. The stock trades about -0.01 of its potential returns per unit of risk. The DFS Furniture PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 155.00 in DFS Furniture PLC on September 1, 2024 and sell it today you would earn a total of 7.00 from holding DFS Furniture PLC or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. DFS Furniture PLC
Performance |
| Timeline |
| Haier Smart Home |
| DFS Furniture PLC |
Haier Smart and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and DFS Furniture
The main advantage of trading using opposite Haier Smart and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc |
| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |