Correlation Between Prudential Financial and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Hong Kong 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 Prudential Financial and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and Hong Kong Land, you can compare the effects of market volatilities on Prudential Financial and Hong Kong 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 Prudential Financial with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Hong Kong.
Diversification Opportunities for Prudential Financial and Hong Kong
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prudential and Hong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land and Prudential Financial 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 Prudential Financial are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of Prudential Financial i.e., Prudential Financial and Hong Kong go up and down completely randomly.
Pair Corralation between Prudential Financial and Hong Kong
Assuming the 90 days trading horizon Prudential Financial is expected to generate 10.25 times more return on investment than Hong Kong. However, Prudential Financial is 10.25 times more volatile than Hong Kong Land. It trades about 0.06 of its potential returns per unit of risk. Hong Kong Land is currently generating about 0.08 per unit of risk. If you would invest 9,882 in Prudential Financial on September 12, 2024 and sell it today you would earn a total of 2,237 from holding Prudential Financial or generate 22.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Prudential Financial vs. Hong Kong Land
Performance |
| Timeline |
| Prudential Financial |
| Hong Kong Land |
Prudential Financial and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Hong Kong
The main advantage of trading using opposite Prudential Financial and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Prudential Financial vs. Hong Kong Land | Prudential Financial vs. Neometals | Prudential Financial vs. Coor Service Management | Prudential Financial vs. Fidelity Sustainable USD |
| Hong Kong vs. Wheaton Precious Metals | Hong Kong vs. Universal Display Corp | Hong Kong vs. Zoom Video Communications | Hong Kong vs. Cornish Metals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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