Correlation Between Bayport International and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Bayport International and Hong Kong 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 Bayport International and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayport International Holdings and Hong Kong Land, you can compare the effects of market volatilities on Bayport International and Hong Kong 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 Bayport International with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayport International and Hong Kong.
Diversification Opportunities for Bayport International and Hong Kong
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayport and Hong is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bayport International Holdings and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land and Bayport International 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 Bayport International Holdings are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of Bayport International i.e., Bayport International and Hong Kong go up and down completely randomly.
Pair Corralation between Bayport International and Hong Kong
Given the investment horizon of 90 days Bayport International Holdings is expected to generate 38.42 times more return on investment than Hong Kong. However, Bayport International is 38.42 times more volatile than Hong Kong Land. It trades about 0.07 of its potential returns per unit of risk. Hong Kong Land is currently generating about 0.01 per unit of risk. If you would invest 0.80 in Bayport International Holdings on November 2, 2024 and sell it today you would lose (0.79) from holding Bayport International Holdings or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayport International Holdings vs. Hong Kong Land
Performance |
| Timeline |
| Bayport International |
| Hong Kong Land |
Bayport International and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayport International and Hong Kong
The main advantage of trading using opposite Bayport International and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayport International position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
| Hong Kong vs. Wharf Holdings | Hong Kong vs. Holiday Island Holdings | Hong Kong vs. Sun Hung Kai | Hong Kong vs. Bayport International Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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