Correlation Between Haier Smart and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Haier Smart and PPG Industries 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 PPG Industries 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 PPG Industries, you can compare the effects of market volatilities on Haier Smart and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and PPG Industries.
Diversification Opportunities for Haier Smart and PPG Industries
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Haier and PPG is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Haier Smart i.e., Haier Smart and PPG Industries go up and down completely randomly.
Pair Corralation between Haier Smart and PPG Industries
Assuming the 90 days trading horizon Haier Smart Home is expected to generate 1.41 times more return on investment than PPG Industries. However, Haier Smart is 1.41 times more volatile than PPG Industries. It trades about 0.08 of its potential returns per unit of risk. PPG Industries is currently generating about 0.0 per unit of risk. If you would invest 150.00 in Haier Smart Home on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Haier Smart Home or generate 17.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Haier Smart Home vs. PPG Industries
Performance |
| Timeline |
| Haier Smart Home |
| PPG Industries |
Haier Smart and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and PPG Industries
The main advantage of trading using opposite Haier Smart and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc |
| PPG Industries vs. Haier Smart Home | PPG Industries vs. Charter Communications | PPG Industries vs. HomeToGo SE | PPG Industries vs. GALENA MINING LTD |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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