Correlation Between JS Global and Hisense Home

Can any of the company-specific risk be diversified away by investing in both JS Global 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 JS Global and Hisense Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JS Global Lifestyle and Hisense Home Appliances, you can compare the effects of market volatilities on JS Global 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 JS Global with a short position of Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and Hisense Home.

Diversification Opportunities for JS Global and Hisense Home

0.18

Correlation Coefficient

JS Global  Hisense Home

Average diversification

The 3 months correlation between JGLCF and Hisense is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Lifestyle 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 JS Global 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 JS Global Lifestyle 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 JS Global i.e., JS Global and Hisense Home go up and down completely randomly.

Pair Corralation between JS Global and Hisense Home

Assuming the 90 days horizon JS Global Lifestyle is expected to under-perform the Hisense Home. But the pink sheet apears to be less risky and, when comparing its historical volatility, JS Global Lifestyle is 1.95 times less risky than Hisense Home. The pink sheet trades about -0.08 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  240.00  in Hisense Home Appliances on September 12, 2024 and sell it today you would earn a total of  68.00  from holding Hisense Home Appliances or generate 28.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

JS Global Lifestyle  vs.  Hisense Home Appliances

JS Global Lifestyle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JS Global Lifestyle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hisense Home Appliances

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hisense Home Appliances are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Hisense Home reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JS Global and Hisense Home

The main advantage of trading using opposite JS Global and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Global 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.

The idea behind JS Global Lifestyle and Hisense Home Appliances pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.