Correlation Between APPLIED MATERIALS and HK Electric
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and HK Electric Investments, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and HK Electric.
Diversification Opportunities for APPLIED MATERIALS and HK Electric
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and HKT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and HK Electric go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and HK Electric
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the HK Electric. In addition to that, APPLIED MATERIALS is 3.13 times more volatile than HK Electric Investments. It trades about -0.11 of its total potential returns per unit of risk. HK Electric Investments is currently generating about 0.0 per unit of volatility. If you would invest 63.00 in HK Electric Investments on August 30, 2024 and sell it today you would earn a total of 0.00 from holding HK Electric Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. HK Electric Investments
Performance |
| Timeline |
| APPLIED MATERIALS |
| HK Electric Investments |
APPLIED MATERIALS and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and HK Electric
The main advantage of trading using opposite APPLIED MATERIALS and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Superior Plus Corp | APPLIED MATERIALS vs. SIVERS SEMICONDUCTORS AB |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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