Correlation Between Magna International and Hesai Group
Can any of the company-specific risk be diversified away by investing in both Magna International and Hesai Group 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 Magna International and Hesai Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Hesai Group American, you can compare the effects of market volatilities on Magna International and Hesai Group 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 Magna International with a short position of Hesai Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Hesai Group.
Diversification Opportunities for Magna International and Hesai Group
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Magna and Hesai is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Hesai Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hesai Group American and Magna International 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 Magna International are associated (or correlated) with Hesai Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hesai Group American has no effect on the direction of Magna International i.e., Magna International and Hesai Group go up and down completely randomly.
Pair Corralation between Magna International and Hesai Group
Considering the 90-day investment horizon Magna International is expected to generate 0.59 times more return on investment than Hesai Group. However, Magna International is 1.69 times less risky than Hesai Group. It trades about 0.13 of its potential returns per unit of risk. Hesai Group American is currently generating about 0.01 per unit of risk. If you would invest 4,250 in Magna International on August 27, 2024 and sell it today you would earn a total of 258.00 from holding Magna International or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Hesai Group American
Performance |
| Timeline |
| Magna International |
| Hesai Group American |
Magna International and Hesai Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Hesai Group
The main advantage of trading using opposite Magna International and Hesai Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Hesai Group 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 Hesai Group will offset losses from the drop in Hesai Group's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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