Correlation Between Twin Ridge and Haier Smart

Can any of the company-specific risk be diversified away by investing in both Twin Ridge and Haier Smart 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 Twin Ridge and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Twin Ridge Capital and Haier Smart Home, you can compare the effects of market volatilities on Twin Ridge and Haier Smart 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 Twin Ridge with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twin Ridge and Haier Smart.

Diversification Opportunities for Twin Ridge and Haier Smart

0.0

Correlation Coefficient

Twin Ridge  Haier Smart

Pay attention - limited upside

The 3 months correlation between Twin and Haier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Twin Ridge Capital and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and Twin Ridge 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 Twin Ridge Capital are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Twin Ridge i.e., Twin Ridge and Haier Smart go up and down completely randomly.

Pair Corralation between Twin Ridge and Haier Smart

If you would invest  90.00  in Haier Smart Home on September 12, 2024 and sell it today you would earn a total of  85.00  from holding Haier Smart Home or generate 94.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Twin Ridge Capital  vs.  Haier Smart Home

Twin Ridge Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twin Ridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Twin Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Haier Smart Home

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Haier Smart Home are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Haier Smart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Twin Ridge and Haier Smart

The main advantage of trading using opposite Twin Ridge and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twin Ridge position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.

The idea behind Twin Ridge Capital and Haier Smart Home 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.