Correlation Between Xiaomi and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Xiaomi 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 Xiaomi and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi and HSBC Holdings plc, you can compare the effects of market volatilities on Xiaomi 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 Xiaomi with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi and HSBC Holdings.
Diversification Opportunities for Xiaomi and HSBC Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xiaomi and HSBC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi 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 Xiaomi 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 Xiaomi 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 Xiaomi i.e., Xiaomi and HSBC Holdings go up and down completely randomly.
Pair Corralation between Xiaomi and HSBC Holdings
If you would invest 8,100 in Xiaomi on October 20, 2024 and sell it today you would earn a total of 1,500 from holding Xiaomi or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Xiaomi vs. HSBC Holdings plc
Performance |
| Timeline |
| Xiaomi |
| HSBC Holdings plc |
Xiaomi and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi and HSBC Holdings
The main advantage of trading using opposite Xiaomi and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi 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.The idea behind Xiaomi and HSBC Holdings plc 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.| HSBC Holdings vs. Prudential Financial | HSBC Holdings vs. Ameriprise Financial | HSBC Holdings vs. Grupo Sports World | HSBC Holdings vs. Martin Marietta Materials |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |