Correlation Between AIR PRODCHEMICALS and Hongkong Land
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Hongkong Land 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 AIR PRODCHEMICALS and Hongkong Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Hongkong Land Holdings, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Hongkong Land 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 AIR PRODCHEMICALS with a short position of Hongkong Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Hongkong Land.
Diversification Opportunities for AIR PRODCHEMICALS and Hongkong Land
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AIR and Hongkong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Hongkong Land Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongkong Land Holdings and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with Hongkong Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongkong Land Holdings has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Hongkong Land go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Hongkong Land
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 2.25 times less return on investment than Hongkong Land. But when comparing it to its historical volatility, AIR PRODCHEMICALS is 1.24 times less risky than Hongkong Land. It trades about 0.01 of its potential returns per unit of risk. Hongkong Land Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 381.00 in Hongkong Land Holdings on October 9, 2024 and sell it today you would earn a total of 43.00 from holding Hongkong Land Holdings or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Hongkong Land Holdings
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Hongkong Land Holdings |
AIR PRODCHEMICALS and Hongkong Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Hongkong Land
The main advantage of trading using opposite AIR PRODCHEMICALS and Hongkong Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Hongkong Land 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 Hongkong Land will offset losses from the drop in Hongkong Land's long position.| AIR PRODCHEMICALS vs. MidCap Financial Investment | AIR PRODCHEMICALS vs. HK Electric Investments | AIR PRODCHEMICALS vs. PennyMac Mortgage Investment | AIR PRODCHEMICALS vs. Tower Semiconductor |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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