Correlation Between CLP Holdings and Hong Kong
Can any of the company-specific risk be diversified away by investing in both CLP Holdings 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 CLP Holdings and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLP Holdings and Hong Kong and, you can compare the effects of market volatilities on CLP Holdings 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 CLP Holdings with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLP Holdings and Hong Kong.
Diversification Opportunities for CLP Holdings and Hong Kong
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between CLP and Hong is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CLP Holdings and Hong Kong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong and CLP Holdings 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 CLP 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 has no effect on the direction of CLP Holdings i.e., CLP Holdings and Hong Kong go up and down completely randomly.
Pair Corralation between CLP Holdings and Hong Kong
Assuming the 90 days horizon CLP Holdings is expected to generate 0.21 times more return on investment than Hong Kong. However, CLP Holdings is 4.8 times less risky than Hong Kong. It trades about 0.19 of its potential returns per unit of risk. Hong Kong and is currently generating about -0.09 per unit of risk. If you would invest 820.00 in CLP Holdings on October 21, 2024 and sell it today you would earn a total of 24.00 from holding CLP Holdings or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CLP Holdings vs. Hong Kong and
Performance |
| Timeline |
| CLP Holdings |
| Hong Kong |
CLP Holdings and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLP Holdings and Hong Kong
The main advantage of trading using opposite CLP Holdings and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLP Holdings 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.| CLP Holdings vs. Hong Kong and | CLP Holdings vs. Power Assets Holdings | CLP Holdings vs. Swire Pacific | CLP Holdings vs. Sun Hung Kai |
| Hong Kong vs. Northwest Natural Gas | Hong Kong vs. Chesapeake Utilities | Hong Kong vs. One Gas | Hong Kong vs. NiSource |
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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