Correlation Between Haier Smart and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Haier Smart and STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION, you can compare the effects of market volatilities on Haier Smart and STRAYER EDUCATION 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and STRAYER EDUCATION.
Diversification Opportunities for Haier Smart and STRAYER EDUCATION
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Haier and STRAYER is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Haier Smart i.e., Haier Smart and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Haier Smart and STRAYER EDUCATION
Assuming the 90 days trading horizon Haier Smart Home is expected to generate 0.83 times more return on investment than STRAYER EDUCATION. However, Haier Smart Home is 1.21 times less risky than STRAYER EDUCATION. It trades about 0.09 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.02 per unit of risk. If you would invest 105.00 in Haier Smart Home on December 13, 2024 and sell it today you would earn a total of 82.00 from holding Haier Smart Home or generate 78.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. STRAYER EDUCATION
Performance |
| Timeline |
| Haier Smart Home |
| STRAYER EDUCATION |
Haier Smart and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and STRAYER EDUCATION
The main advantage of trading using opposite Haier Smart and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, STRAYER EDUCATION 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| Haier Smart vs. Casio Computer CoLtd | ||
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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