Correlation Between Waterdrop ADR and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Waterdrop ADR and Berkshire Hathaway 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 Waterdrop ADR and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterdrop ADR and Berkshire Hathaway, you can compare the effects of market volatilities on Waterdrop ADR and Berkshire Hathaway 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 Waterdrop ADR with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterdrop ADR and Berkshire Hathaway.
Diversification Opportunities for Waterdrop ADR and Berkshire Hathaway
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Waterdrop and Berkshire is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Waterdrop ADR and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Waterdrop ADR 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 Waterdrop ADR are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Waterdrop ADR i.e., Waterdrop ADR and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Waterdrop ADR and Berkshire Hathaway
Considering the 90-day investment horizon Waterdrop ADR is expected to under-perform the Berkshire Hathaway. In addition to that, Waterdrop ADR is 1.5 times more volatile than Berkshire Hathaway. It trades about -0.07 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.13 per unit of volatility. If you would invest 45,849 in Berkshire Hathaway on August 27, 2024 and sell it today you would earn a total of 1,808 from holding Berkshire Hathaway or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterdrop ADR vs. Berkshire Hathaway
Performance |
| Timeline |
| Waterdrop ADR |
| Berkshire Hathaway |
Waterdrop ADR and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterdrop ADR and Berkshire Hathaway
The main advantage of trading using opposite Waterdrop ADR and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterdrop ADR position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Waterdrop ADR vs. Enstar Group Limited | Waterdrop ADR vs. Goosehead Insurance | Waterdrop ADR vs. Axa Equitable Holdings | Waterdrop ADR vs. Fundamental Global |
| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |