Correlation Between Hisense Home and La Z
Can any of the company-specific risk be diversified away by investing in both Hisense Home and La Z 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 Hisense Home and La Z into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hisense Home Appliances and La Z Boy Incorporated, you can compare the effects of market volatilities on Hisense Home and La Z 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 Hisense Home with a short position of La Z. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and La Z.
Diversification Opportunities for Hisense Home and La Z
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hisense and LAZ is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and La Z Boy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Z Boy and Hisense Home 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 Hisense Home Appliances are associated (or correlated) with La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Z Boy has no effect on the direction of Hisense Home i.e., Hisense Home and La Z go up and down completely randomly.
Pair Corralation between Hisense Home and La Z
Assuming the 90 days horizon Hisense Home Appliances is expected to generate 2.56 times more return on investment than La Z. However, Hisense Home is 2.56 times more volatile than La Z Boy Incorporated. It trades about 0.12 of its potential returns per unit of risk. La Z Boy Incorporated is currently generating about 0.29 per unit of risk. If you would invest 312.00 in Hisense Home Appliances on November 2, 2024 and sell it today you would earn a total of 18.00 from holding Hisense Home Appliances or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hisense Home Appliances vs. La Z Boy Incorporated
Performance |
| Timeline |
| Hisense Home Appliances |
| La Z Boy |
Hisense Home and La Z Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hisense Home and La Z
The main advantage of trading using opposite Hisense Home and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home position performs unexpectedly, La Z 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 La Z will offset losses from the drop in La Z's long position.| Hisense Home vs. NORTHEAST UTILITIES | Hisense Home vs. Luckin Coffee | Hisense Home vs. Soken Chemical Engineering | Hisense Home vs. SWISS WATER DECAFFCOFFEE |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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