Correlation Between SoftBank Group and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and HSBC Holdings PLC, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and HSBC Holdings.
Diversification Opportunities for SoftBank Group and HSBC Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoftBank and HSBC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp 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 SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and HSBC Holdings go up and down completely randomly.
Pair Corralation between SoftBank Group and HSBC Holdings
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 2.04 times more return on investment than HSBC Holdings. However, SoftBank Group is 2.04 times more volatile than HSBC Holdings PLC. It trades about 0.05 of its potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.09 per unit of risk. If you would invest 555,735 in SoftBank Group Corp on September 23, 2024 and sell it today you would earn a total of 320,265 from holding SoftBank Group Corp or generate 57.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.55% |
| Values | Daily Returns |
SoftBank Group Corp vs. HSBC Holdings PLC
Performance |
| Timeline |
| SoftBank Group Corp |
| HSBC Holdings PLC |
SoftBank Group and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and HSBC Holdings
The main advantage of trading using opposite SoftBank Group and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Pentair PLC | SoftBank Group vs. Finnair Oyj | SoftBank Group vs. Fair Oaks Income | SoftBank Group vs. Solstad Offshore ASA |
| HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Hyundai Motor | HSBC Holdings vs. Toyota Motor Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |