Correlation Between Stanley Electric and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Stanley Electric 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 Stanley Electric and Hisense Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Electric Co and Hisense Home Appliances, you can compare the effects of market volatilities on Stanley Electric 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 Stanley Electric with a short position of Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Electric and Hisense Home.
Diversification Opportunities for Stanley Electric and Hisense Home
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stanley and Hisense is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Electric Co 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 Stanley Electric 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 Stanley Electric Co 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 Stanley Electric i.e., Stanley Electric and Hisense Home go up and down completely randomly.
Pair Corralation between Stanley Electric and Hisense Home
Assuming the 90 days trading horizon Stanley Electric Co is expected to under-perform the Hisense Home. But the stock apears to be less risky and, when comparing its historical volatility, Stanley Electric Co is 2.44 times less risky than Hisense Home. The stock trades about -0.01 of its potential returns per unit of risk. The Hisense Home Appliances is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Hisense Home Appliances on October 16, 2024 and sell it today you would earn a total of 263.00 from holding Hisense Home Appliances or generate 417.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Electric Co vs. Hisense Home Appliances
Performance |
| Timeline |
| Stanley Electric |
| Hisense Home Appliances |
Stanley Electric and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Electric and Hisense Home
The main advantage of trading using opposite Stanley Electric and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Electric 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.| Stanley Electric vs. Hisense Home Appliances | Stanley Electric vs. American Airlines Group | Stanley Electric vs. Beazer Homes USA | Stanley Electric vs. OFFICE DEPOT |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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