Correlation Between Viomi Technology and Bassett Furniture

Can any of the company-specific risk be diversified away by investing in both Viomi Technology and Bassett Furniture 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 Viomi Technology and Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Viomi Technology ADR and Bassett Furniture Industries, you can compare the effects of market volatilities on Viomi Technology and Bassett Furniture 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 Viomi Technology with a short position of Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viomi Technology and Bassett Furniture.

Diversification Opportunities for Viomi Technology and Bassett Furniture

0.26

Correlation Coefficient

Viomi Technology  Bassett Furniture

Modest diversification

The 3 months correlation between Viomi and Bassett is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Viomi Technology ADR and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture and Viomi Technology 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 Viomi Technology ADR are associated (or correlated) with Bassett Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassett Furniture has no effect on the direction of Viomi Technology i.e., Viomi Technology and Bassett Furniture go up and down completely randomly.

Pair Corralation between Viomi Technology and Bassett Furniture

Given the investment horizon of 90 days Viomi Technology ADR is expected to generate 3.24 times more return on investment than Bassett Furniture. However, Viomi Technology is 3.24 times more volatile than Bassett Furniture Industries. It trades about 0.05 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about 0.11 per unit of risk. If you would invest  150.00  in Viomi Technology ADR on September 4, 2024 and sell it today you would earn a total of  10.00  from holding Viomi Technology ADR or generate 6.67% return on investment over 90 days.

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

Viomi Technology ADR  vs.  Bassett Furniture Industries

Viomi Technology ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viomi Technology ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viomi Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bassett Furniture

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Bassett Furniture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Viomi Technology and Bassett Furniture

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

The idea behind Viomi Technology ADR and Bassett Furniture Industries 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.