Correlation Between NEW MILLENNIUM and HK Electric
Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and HK Electric 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 NEW MILLENNIUM and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and HK Electric Investments, you can compare the effects of market volatilities on NEW MILLENNIUM and HK Electric 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 NEW MILLENNIUM with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and HK Electric.
Diversification Opportunities for NEW MILLENNIUM and HK Electric
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NEW and HKT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments and NEW MILLENNIUM 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 NEW MILLENNIUM IRON are associated (or correlated) with HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and HK Electric go up and down completely randomly.
Pair Corralation between NEW MILLENNIUM and HK Electric
Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 3.12 times more return on investment than HK Electric. However, NEW MILLENNIUM is 3.12 times more volatile than HK Electric Investments. It trades about 0.05 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.1 per unit of risk. If you would invest 750.00 in NEW MILLENNIUM IRON on October 14, 2024 and sell it today you would earn a total of 50.00 from holding NEW MILLENNIUM IRON or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW MILLENNIUM IRON vs. HK Electric Investments
Performance |
| Timeline |
| NEW MILLENNIUM IRON |
| HK Electric Investments |
NEW MILLENNIUM and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEW MILLENNIUM and HK Electric
The main advantage of trading using opposite NEW MILLENNIUM and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| NEW MILLENNIUM vs. Apple Inc | NEW MILLENNIUM vs. Apple Inc | NEW MILLENNIUM vs. Apple Inc | NEW MILLENNIUM vs. Apple Inc |
| HK Electric vs. The Japan Steel | HK Electric vs. NEW MILLENNIUM IRON | HK Electric vs. GAMESTOP | HK Electric vs. PENN NATL GAMING |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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