Correlation Between CITY OFFICE and HK Electric
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE 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 CITY OFFICE and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and HK Electric Investments, you can compare the effects of market volatilities on CITY OFFICE 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 CITY OFFICE with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and HK Electric.
Diversification Opportunities for CITY OFFICE and HK Electric
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITY and HKT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT 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 CITY OFFICE 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 CITY OFFICE REIT 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 CITY OFFICE i.e., CITY OFFICE and HK Electric go up and down completely randomly.
Pair Corralation between CITY OFFICE and HK Electric
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 4.41 times more return on investment than HK Electric. However, CITY OFFICE is 4.41 times more volatile than HK Electric Investments. It trades about 0.26 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 466.00 in CITY OFFICE REIT on September 1, 2024 and sell it today you would earn a total of 94.00 from holding CITY OFFICE REIT or generate 20.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. HK Electric Investments
Performance |
| Timeline |
| CITY OFFICE REIT |
| HK Electric Investments |
CITY OFFICE and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and HK Electric
The main advantage of trading using opposite CITY OFFICE and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE 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.| CITY OFFICE vs. QINGCI GAMES INC | CITY OFFICE vs. ANGLER GAMING PLC | CITY OFFICE vs. GAMESTOP | CITY OFFICE vs. Games Workshop Group |
| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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