Correlation Between BEAZER HOMES and Hisense Home

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

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

Diversification Opportunities for BEAZER HOMES and Hisense Home

0.74

Correlation Coefficient

BEAZER HOMES  Hisense Home

Poor diversification

The 3 months correlation between BEAZER and Hisense is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BEAZER HOMES USA 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 BEAZER HOMES 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 BEAZER HOMES USA 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 BEAZER HOMES i.e., BEAZER HOMES and Hisense Home go up and down completely randomly.

Pair Corralation between BEAZER HOMES and Hisense Home

Assuming the 90 days trading horizon BEAZER HOMES USA is expected to generate 1.09 times more return on investment than Hisense Home. However, BEAZER HOMES is 1.09 times more volatile than Hisense Home Appliances. It trades about 0.17 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about 0.0 per unit of risk. If you would invest  1,630  in BEAZER HOMES USA on March 19, 2025 and sell it today you would earn a total of  260.00  from holding BEAZER HOMES USA or generate 15.95% return on investment over 90 days.

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

BEAZER HOMES USA  vs.  Hisense Home Appliances

BEAZER HOMES USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BEAZER HOMES USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BEAZER HOMES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hisense Home Appliances

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hisense Home Appliances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BEAZER HOMES and Hisense Home

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