Correlation Between COSTCO WHOLESALE and HK Electric
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE 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 COSTCO WHOLESALE and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and HK Electric Investments, you can compare the effects of market volatilities on COSTCO WHOLESALE 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 COSTCO WHOLESALE with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and HK Electric.
Diversification Opportunities for COSTCO WHOLESALE and HK Electric
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COSTCO and HKT is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE i.e., COSTCO WHOLESALE and HK Electric go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and HK Electric
Assuming the 90 days trading horizon COSTCO WHOLESALE is expected to generate 5.96 times less return on investment than HK Electric. But when comparing it to its historical volatility, COSTCO WHOLESALE CDR is 1.6 times less risky than HK Electric. It trades about 0.03 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 43.00 in HK Electric Investments on October 13, 2024 and sell it today you would earn a total of 22.00 from holding HK Electric Investments or generate 51.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. HK Electric Investments
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| HK Electric Investments |
COSTCO WHOLESALE and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and HK Electric
The main advantage of trading using opposite COSTCO WHOLESALE and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE 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.| COSTCO WHOLESALE vs. NTT DATA | COSTCO WHOLESALE vs. Linedata Services SA | COSTCO WHOLESALE vs. Thai Beverage Public | COSTCO WHOLESALE vs. SILVER BULLET DATA |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |