Correlation Between DFS Furniture and Haier Smart
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Haier Smart Home, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Haier Smart.
Diversification Opportunities for DFS Furniture and Haier Smart
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DFS and Haier is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and Haier Smart go up and down completely randomly.
Pair Corralation between DFS Furniture and Haier Smart
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.46 times more return on investment than Haier Smart. However, DFS Furniture is 1.46 times more volatile than Haier Smart Home. It trades about 0.11 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.01 per unit of risk. 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 |
DFS Furniture PLC vs. Haier Smart Home
Performance |
| Timeline |
| DFS Furniture PLC |
| Haier Smart Home |
DFS Furniture and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Haier Smart
The main advantage of trading using opposite DFS Furniture and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |