Correlation Between Cornish Metals and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and HSBC Holdings PLC, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and HSBC Holdings.
Diversification Opportunities for Cornish Metals and HSBC Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cornish and HSBC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals 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 Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and HSBC Holdings go up and down completely randomly.
Pair Corralation between Cornish Metals and HSBC Holdings
Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the HSBC Holdings. In addition to that, Cornish Metals is 2.94 times more volatile than HSBC Holdings PLC. It trades about -0.01 of its total potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.08 per unit of volatility. If you would invest 51,866 in HSBC Holdings PLC on November 2, 2024 and sell it today you would earn a total of 32,154 from holding HSBC Holdings PLC or generate 61.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Cornish Metals vs. HSBC Holdings PLC
Performance |
| Timeline |
| Cornish Metals |
| HSBC Holdings PLC |
Cornish Metals and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and HSBC Holdings
The main advantage of trading using opposite Cornish Metals and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. European Metals Holdings | Cornish Metals vs. Central Asia Metals | Cornish Metals vs. Golden Metal Resources | Cornish Metals vs. Naked Wines plc |
| HSBC Holdings vs. Air Products Chemicals | HSBC Holdings vs. Raymond James Financial | HSBC Holdings vs. Discover Financial Services | HSBC Holdings vs. Westlake Chemical Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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