Correlation Between GX AI and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both GX AI 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 GX AI and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GX AI TECH and HSBC Holdings plc, you can compare the effects of market volatilities on GX AI 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 GX AI with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GX AI and HSBC Holdings.
Diversification Opportunities for GX AI and HSBC Holdings
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BAIQ39 and HSBC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH 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 GX AI 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 GX AI TECH 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 GX AI i.e., GX AI and HSBC Holdings go up and down completely randomly.
Pair Corralation between GX AI and HSBC Holdings
Assuming the 90 days trading horizon GX AI TECH is expected to generate 3.05 times more return on investment than HSBC Holdings. However, GX AI is 3.05 times more volatile than HSBC Holdings plc. It trades about 0.01 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.02 per unit of risk. If you would invest 8,024 in GX AI TECH on October 12, 2024 and sell it today you would lose (96.00) from holding GX AI TECH or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GX AI TECH vs. HSBC Holdings plc
Performance |
| Timeline |
| GX AI TECH |
| HSBC Holdings plc |
GX AI and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GX AI and HSBC Holdings
The main advantage of trading using opposite GX AI and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GX AI 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.| GX AI vs. UnitedHealth Group Incorporated | GX AI vs. Charter Communications | GX AI vs. Apartment Investment and | GX AI vs. Clover Health Investments, |
| HSBC Holdings vs. Synchrony Financial | HSBC Holdings vs. Citizens Financial Group, | HSBC Holdings vs. GX AI TECH | HSBC Holdings vs. TechnipFMC plc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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