Correlation Between Canadian Utilities and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Haier Smart 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 Canadian Utilities and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and Haier Smart Home, you can compare the effects of market volatilities on Canadian Utilities and Haier Smart 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 Canadian Utilities with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Haier Smart.
Diversification Opportunities for Canadian Utilities and Haier Smart
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Haier is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Haier Smart go up and down completely randomly.
Pair Corralation between Canadian Utilities and Haier Smart
Assuming the 90 days horizon Canadian Utilities is expected to generate 5.35 times less return on investment than Haier Smart. But when comparing it to its historical volatility, Canadian Utilities Limited is 1.6 times less risky than Haier Smart. It trades about 0.03 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Haier Smart Home on October 16, 2024 and sell it today you would earn a total of 78.00 from holding Haier Smart Home or generate 78.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Haier Smart Home
Performance |
| Timeline |
| Canadian Utilities |
| Haier Smart Home |
Canadian Utilities and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Haier Smart
The main advantage of trading using opposite Canadian Utilities and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Canadian Utilities vs. Fuji Media Holdings | Canadian Utilities vs. Hanison Construction Holdings | Canadian Utilities vs. RCS MediaGroup SpA | Canadian Utilities vs. Seven West Media |
| Haier Smart vs. PLANT VEDA FOODS | Haier Smart vs. Algonquin Power Utilities | Haier Smart vs. Austevoll Seafood ASA | Haier Smart vs. Canadian Utilities Limited |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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