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

0.66

Correlation Coefficient

Magna International  Hesai Group

Poor diversification

The 3 months correlation between Magna and Hesai is 0.66. 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 34.92 times less return on investment than Hesai Group. But when comparing it to its historical volatility, Magna International is 5.83 times less risky than Hesai Group. It trades about 0.08 of its potential returns per unit of risk. Hesai Group American is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  431.00  in Hesai Group American on September 14, 2024 and sell it today you would earn a total of  674.00  from holding Hesai Group American or generate 156.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Magna International  vs.  Hesai Group American

Magna International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Magna International sustained solid returns over the last few months and may actually be approaching a breakup point.

Hesai Group American

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Magna International and Hesai Group American 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.