Correlation Between ELECTROLUX and Qingdao Haier
Can any of the company-specific risk be diversified away by investing in both ELECTROLUX and Qingdao Haier 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 ELECTROLUX and Qingdao Haier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTROLUX B ADR2 and Qingdao Haier Co, you can compare the effects of market volatilities on ELECTROLUX and Qingdao Haier 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 ELECTROLUX with a short position of Qingdao Haier. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTROLUX and Qingdao Haier.
Diversification Opportunities for ELECTROLUX and Qingdao Haier
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between ELECTROLUX and Qingdao is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ELECTROLUX B ADR2 and Qingdao Haier Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Haier and ELECTROLUX 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 ELECTROLUX B ADR2 are associated (or correlated) with Qingdao Haier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Haier has no effect on the direction of ELECTROLUX i.e., ELECTROLUX and Qingdao Haier go up and down completely randomly.
Pair Corralation between ELECTROLUX and Qingdao Haier
Assuming the 90 days trading horizon ELECTROLUX B ADR2 is expected to under-perform the Qingdao Haier. In addition to that, ELECTROLUX is 1.4 times more volatile than Qingdao Haier Co. It trades about -0.03 of its total potential returns per unit of risk. Qingdao Haier Co is currently generating about 0.09 per unit of volatility. If you would invest 99.00 in Qingdao Haier Co on September 12, 2024 and sell it today you would earn a total of 80.00 from holding Qingdao Haier Co or generate 80.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTROLUX B ADR2 vs. Qingdao Haier Co
Performance |
| Timeline |
| ELECTROLUX B ADR2 |
| Qingdao Haier |
ELECTROLUX and Qingdao Haier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTROLUX and Qingdao Haier
The main advantage of trading using opposite ELECTROLUX and Qingdao Haier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTROLUX position performs unexpectedly, Qingdao Haier 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 Qingdao Haier will offset losses from the drop in Qingdao Haier's long position.| ELECTROLUX vs. Qingdao Haier Co | ELECTROLUX vs. Qingdao Haier Co | ELECTROLUX vs. Mohawk Industries | ELECTROLUX vs. SEB SA |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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