Correlation Between CDL INVESTMENT and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT 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 CDL INVESTMENT and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDL INVESTMENT and HSBC Holdings plc, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and HSBC Holdings.
Diversification Opportunities for CDL INVESTMENT and HSBC Holdings
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CDL and HSBC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and HSBC Holdings go up and down completely randomly.
Pair Corralation between CDL INVESTMENT and HSBC Holdings
Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 1.82 times less return on investment than HSBC Holdings. In addition to that, CDL INVESTMENT is 1.38 times more volatile than HSBC Holdings plc. It trades about 0.05 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.12 per unit of volatility. If you would invest 3,884 in HSBC Holdings plc on October 7, 2024 and sell it today you would earn a total of 896.00 from holding HSBC Holdings plc or generate 23.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDL INVESTMENT vs. HSBC Holdings plc
Performance |
| Timeline |
| CDL INVESTMENT |
| HSBC Holdings plc |
CDL INVESTMENT and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDL INVESTMENT and HSBC Holdings
The main advantage of trading using opposite CDL INVESTMENT and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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.| CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc |
| HSBC Holdings vs. MCEWEN MINING INC | HSBC Holdings vs. HK Electric Investments | HSBC Holdings vs. Jacquet Metal Service | HSBC Holdings vs. IMPERIAL TOBACCO |
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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