Correlation Between Air Transport and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Air Transport and HSBC Holdings 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 Transport and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and HSBC Holdings plc, you can compare the effects of market volatilities on Air Transport and HSBC Holdings 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 Transport with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and HSBC Holdings.
Diversification Opportunities for Air Transport and HSBC Holdings
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and HSBC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc and Air Transport 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 Transport Services are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Air Transport i.e., Air Transport and HSBC Holdings go up and down completely randomly.
Pair Corralation between Air Transport and HSBC Holdings
Assuming the 90 days horizon Air Transport is expected to generate 4.83 times less return on investment than HSBC Holdings. But when comparing it to its historical volatility, Air Transport Services is 2.21 times less risky than HSBC Holdings. It trades about 0.11 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,700 in HSBC Holdings plc on October 25, 2024 and sell it today you would earn a total of 220.00 from holding HSBC Holdings plc or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. HSBC Holdings plc
Performance |
| Timeline |
| Air Transport Services |
| HSBC Holdings plc |
Air Transport and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and HSBC Holdings
The main advantage of trading using opposite Air Transport and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Air Transport vs. Carsales | Air Transport vs. AGRICULTBK HADR25 YC | Air Transport vs. Tradeweb Markets | Air Transport vs. Hanison Construction Holdings |
| HSBC Holdings vs. ELMOS SEMICONDUCTOR | HSBC Holdings vs. PURETECH HEALTH PLC | HSBC Holdings vs. BE Semiconductor Industries | HSBC Holdings vs. Universal Health Realty |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |