Correlation Between Hisense Home and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Hisense Home and Relx PLC 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 Relx PLC 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 Relx PLC ADR, you can compare the effects of market volatilities on Hisense Home and Relx PLC 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and Relx PLC.
Diversification Opportunities for Hisense Home and Relx PLC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hisense and Relx is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Hisense Home i.e., Hisense Home and Relx PLC go up and down completely randomly.
Pair Corralation between Hisense Home and Relx PLC
Assuming the 90 days horizon Hisense Home is expected to generate 1.28 times less return on investment than Relx PLC. In addition to that, Hisense Home is 2.22 times more volatile than Relx PLC ADR. It trades about 0.12 of its total potential returns per unit of risk. Relx PLC ADR is currently generating about 0.33 per unit of volatility. If you would invest 4,420 in Relx PLC ADR on November 3, 2024 and sell it today you would earn a total of 380.00 from holding Relx PLC ADR or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hisense Home Appliances vs. Relx PLC ADR
Performance |
| Timeline |
| Hisense Home Appliances |
| Relx PLC ADR |
Hisense Home and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hisense Home and Relx PLC
The main advantage of trading using opposite Hisense Home and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| Hisense Home vs. PENN NATL GAMING | Hisense Home vs. GREENX METALS LTD | Hisense Home vs. PLAYMATES TOYS | Hisense Home vs. MCEWEN MINING INC |
| Relx PLC vs. United Airlines Holdings | Relx PLC vs. Direct Line Insurance | Relx PLC vs. REVO INSURANCE SPA | Relx PLC vs. Webster Financial |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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