Correlation Between Lyxor 1 and Hongkong
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Hongkong 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 Lyxor 1 and Hongkong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and The Hongkong and, you can compare the effects of market volatilities on Lyxor 1 and Hongkong 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 Lyxor 1 with a short position of Hongkong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Hongkong.
Diversification Opportunities for Lyxor 1 and Hongkong
Poor diversification
The 3 months correlation between Lyxor and Hongkong is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and The Hongkong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hongkong and Lyxor 1 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 Lyxor 1 are associated (or correlated) with Hongkong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hongkong has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Hongkong go up and down completely randomly.
Pair Corralation between Lyxor 1 and Hongkong
Assuming the 90 days trading horizon Lyxor 1 is expected to under-perform the Hongkong. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 1 is 2.07 times less risky than Hongkong. The etf trades about -0.15 of its potential returns per unit of risk. The The Hongkong and is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 73.00 in The Hongkong and on October 11, 2024 and sell it today you would earn a total of 2.00 from holding The Hongkong and or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Lyxor 1 vs. The Hongkong and
Performance |
| Timeline |
| Lyxor 1 |
| The Hongkong |
Lyxor 1 and Hongkong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Hongkong
The main advantage of trading using opposite Lyxor 1 and Hongkong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Hongkong 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 Hongkong will offset losses from the drop in Hongkong's long position.| Lyxor 1 vs. Lyxor Fed Funds | Lyxor 1 vs. Lyxor BofAML USD | Lyxor 1 vs. Lyxor Index Fund | Lyxor 1 vs. Lyxor 1 TecDAX |
| Hongkong vs. Semiconductor Manufacturing International | Hongkong vs. AEON METALS LTD | Hongkong vs. Elmos Semiconductor SE | Hongkong vs. ON SEMICONDUCTOR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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