Correlation Between Agricultural Bank and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank 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 Agricultural Bank and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank of and HSBC Holdings plc, you can compare the effects of market volatilities on Agricultural Bank 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 Agricultural Bank with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and HSBC Holdings.
Diversification Opportunities for Agricultural Bank and HSBC Holdings
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Agricultural and HSBC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of 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 Agricultural Bank 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 Agricultural Bank of 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 Agricultural Bank i.e., Agricultural Bank and HSBC Holdings go up and down completely randomly.
Pair Corralation between Agricultural Bank and HSBC Holdings
Assuming the 90 days horizon Agricultural Bank is expected to generate 1.86 times less return on investment than HSBC Holdings. In addition to that, Agricultural Bank is 1.55 times more volatile than HSBC Holdings plc. It trades about 0.13 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.37 per unit of volatility. If you would invest 4,920 in HSBC Holdings plc on November 29, 2024 and sell it today you would earn a total of 580.00 from holding HSBC Holdings plc or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agricultural Bank of vs. HSBC Holdings plc
Performance |
| Timeline |
| Agricultural Bank |
| HSBC Holdings plc |
Agricultural Bank and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agricultural Bank and HSBC Holdings
The main advantage of trading using opposite Agricultural Bank and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank 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.| Agricultural Bank vs. Suntory Beverage Food | Agricultural Bank vs. Zijin Mining Group | Agricultural Bank vs. GALENA MINING LTD | Agricultural Bank vs. GREENX METALS LTD |
| HSBC Holdings vs. MOLSON RS BEVERAGE | HSBC Holdings vs. Carsales | HSBC Holdings vs. CanSino Biologics | HSBC Holdings vs. Salesforce |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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