Correlation Between Laureate Education and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Laureate Education and Hisense Home 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 Laureate Education and Hisense Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Hisense Home Appliances, you can compare the effects of market volatilities on Laureate Education and Hisense Home 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 Laureate Education with a short position of Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Hisense Home.
Diversification Opportunities for Laureate Education and Hisense Home
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Laureate and Hisense is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances and Laureate Education 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 Laureate Education are associated (or correlated) with Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of Laureate Education i.e., Laureate Education and Hisense Home go up and down completely randomly.
Pair Corralation between Laureate Education and Hisense Home
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.55 times more return on investment than Hisense Home. However, Laureate Education is 1.83 times less risky than Hisense Home. It trades about 0.16 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about 0.06 per unit of risk. If you would invest 1,380 in Laureate Education on August 31, 2024 and sell it today you would earn a total of 400.00 from holding Laureate Education or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Laureate Education vs. Hisense Home Appliances
Performance |
| Timeline |
| Laureate Education |
| Hisense Home Appliances |
Laureate Education and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Hisense Home
The main advantage of trading using opposite Laureate Education and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.| Laureate Education vs. Universal Insurance Holdings | Laureate Education vs. Zurich Insurance Group | Laureate Education vs. HANOVER INSURANCE | Laureate Education vs. Perseus Mining Limited |
| Hisense Home vs. SERI INDUSTRIAL EO | Hisense Home vs. SOUTHWEST AIRLINES | Hisense Home vs. Gol Intelligent Airlines | Hisense Home vs. Scandinavian Tobacco Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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