Correlation Between ARROW ELECTRONICS and HK Electric
Can any of the company-specific risk be diversified away by investing in both ARROW ELECTRONICS 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 ARROW ELECTRONICS and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARROW ELECTRONICS and HK Electric Investments, you can compare the effects of market volatilities on ARROW ELECTRONICS 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 ARROW ELECTRONICS with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARROW ELECTRONICS and HK Electric.
Diversification Opportunities for ARROW ELECTRONICS and HK Electric
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARROW and HKT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS 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 ARROW ELECTRONICS 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 ARROW ELECTRONICS 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 ARROW ELECTRONICS i.e., ARROW ELECTRONICS and HK Electric go up and down completely randomly.
Pair Corralation between ARROW ELECTRONICS and HK Electric
Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to generate 3.52 times more return on investment than HK Electric. However, ARROW ELECTRONICS is 3.52 times more volatile than HK Electric Investments. It trades about 0.03 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 10,800 in ARROW ELECTRONICS on December 4, 2024 and sell it today you would lose (800.00) from holding ARROW ELECTRONICS or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARROW ELECTRONICS vs. HK Electric Investments
Performance |
| Timeline |
| ARROW ELECTRONICS |
| HK Electric Investments |
ARROW ELECTRONICS and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARROW ELECTRONICS and HK Electric
The main advantage of trading using opposite ARROW ELECTRONICS and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARROW ELECTRONICS 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.| ARROW ELECTRONICS vs. Verizon Communications | ARROW ELECTRONICS vs. INTERSHOP Communications Aktiengesellschaft | ARROW ELECTRONICS vs. T MOBILE US | ARROW ELECTRONICS vs. FIH MOBILE |
| HK Electric vs. COFCO Joycome Foods | HK Electric vs. Cal Maine Foods | HK Electric vs. 24SEVENOFFICE GROUP AB | HK Electric vs. CITY OFFICE REIT |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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