Correlation Between St Galler and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both St Galler and HSBC Holdings 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 St Galler and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between St Galler Kantonalbank and HSBC Holdings PLC, you can compare the effects of market volatilities on St Galler and HSBC Holdings 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 St Galler with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Galler and HSBC Holdings.
Diversification Opportunities for St Galler and HSBC Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0QQZ and HSBC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and HSBC Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings PLC and St Galler 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 St Galler Kantonalbank are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings PLC has no effect on the direction of St Galler i.e., St Galler and HSBC Holdings go up and down completely randomly.
Pair Corralation between St Galler and HSBC Holdings
Assuming the 90 days trading horizon St Galler Kantonalbank is expected to under-perform the HSBC Holdings. But the stock apears to be less risky and, when comparing its historical volatility, St Galler Kantonalbank is 1.67 times less risky than HSBC Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The HSBC Holdings PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 50,041 in HSBC Holdings PLC on October 13, 2024 and sell it today you would earn a total of 29,869 from holding HSBC Holdings PLC or generate 59.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
St Galler Kantonalbank vs. HSBC Holdings PLC
Performance |
| Timeline |
| St Galler Kantonalbank |
| HSBC Holdings PLC |
St Galler and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with St Galler and HSBC Holdings
The main advantage of trading using opposite St Galler and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St Galler position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| St Galler vs. Host Hotels Resorts | St Galler vs. InterContinental Hotels Group | St Galler vs. Moneta Money Bank | St Galler vs. Sydbank |
| HSBC Holdings vs. AcadeMedia AB | HSBC Holdings vs. XLMedia PLC | HSBC Holdings vs. St Galler Kantonalbank | HSBC Holdings vs. LBG Media PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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