Correlation Between Hisense Home and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Hisense Home and Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods, you can compare the effects of market volatilities on Hisense Home and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and Lifeway Foods.
Diversification Opportunities for Hisense Home and Lifeway Foods
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hisense and Lifeway is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Hisense Home i.e., Hisense Home and Lifeway Foods go up and down completely randomly.
Pair Corralation between Hisense Home and Lifeway Foods
Assuming the 90 days horizon Hisense Home Appliances is expected to generate 0.86 times more return on investment than Lifeway Foods. However, Hisense Home Appliances is 1.16 times less risky than Lifeway Foods. It trades about 0.08 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.06 per unit of risk. If you would invest 145.00 in Hisense Home Appliances on August 29, 2024 and sell it today you would earn a total of 131.00 from holding Hisense Home Appliances or generate 90.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hisense Home Appliances vs. Lifeway Foods
Performance |
| Timeline |
| Hisense Home Appliances |
| Lifeway Foods |
Hisense Home and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hisense Home and Lifeway Foods
The main advantage of trading using opposite Hisense Home and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Hisense Home vs. Superior Plus Corp | Hisense Home vs. NMI Holdings | Hisense Home vs. Origin Agritech | Hisense Home vs. SIVERS SEMICONDUCTORS AB |
| Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. Origin Agritech | Lifeway Foods vs. SIVERS SEMICONDUCTORS AB |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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