Correlation Between Haier Electronics and Sony

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

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

Diversification Opportunities for Haier Electronics and Sony

0.0

Correlation Coefficient

Haier Electronics  Sony

Pay attention - limited upside

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

Pair Corralation between Haier Electronics and Sony

If you would invest (100.00) in Sony Group on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Sony Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Haier Electronics Group  vs.  Sony Group

Haier Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haier Electronics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Haier Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sony Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sony Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sony is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Haier Electronics and Sony

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

The idea behind Haier Electronics Group and Sony Group 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.