Correlation Between BURLINGTON STORES and HK Electric
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES 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 BURLINGTON STORES and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and HK Electric Investments, you can compare the effects of market volatilities on BURLINGTON STORES 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 BURLINGTON STORES with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and HK Electric.
Diversification Opportunities for BURLINGTON STORES and HK Electric
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BURLINGTON and HKT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES 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 BURLINGTON STORES 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 BURLINGTON STORES 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 BURLINGTON STORES i.e., BURLINGTON STORES and HK Electric go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and HK Electric
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.77 times less return on investment than HK Electric. In addition to that, BURLINGTON STORES is 1.52 times more volatile than HK Electric Investments. It trades about 0.03 of its total potential returns per unit of risk. HK Electric Investments is currently generating about 0.09 per unit of volatility. If you would invest 64.00 in HK Electric Investments on October 12, 2024 and sell it today you would earn a total of 1.00 from holding HK Electric Investments or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. HK Electric Investments
Performance |
| Timeline |
| BURLINGTON STORES |
| HK Electric Investments |
BURLINGTON STORES and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and HK Electric
The main advantage of trading using opposite BURLINGTON STORES and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES 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.| BURLINGTON STORES vs. Hisense Home Appliances | BURLINGTON STORES vs. Keck Seng Investments | BURLINGTON STORES vs. AOYAMA TRADING | BURLINGTON STORES vs. Addus HomeCare |
| HK Electric vs. GMO Internet | HK Electric vs. Retail Estates NV | HK Electric vs. BURLINGTON STORES | HK Electric vs. Ribbon Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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