Correlation Between Foresight Environmental and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Foresight Environmental 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 Foresight Environmental and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foresight Environmental Infrastructure and HSBC Holdings PLC, you can compare the effects of market volatilities on Foresight Environmental 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 Foresight Environmental with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foresight Environmental and HSBC Holdings.
Diversification Opportunities for Foresight Environmental and HSBC Holdings
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Foresight and HSBC is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Foresight Environmental Infras 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 Foresight Environmental 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 Foresight Environmental Infrastructure 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 Foresight Environmental i.e., Foresight Environmental and HSBC Holdings go up and down completely randomly.
Pair Corralation between Foresight Environmental and HSBC Holdings
Assuming the 90 days trading horizon Foresight Environmental Infrastructure is expected to under-perform the HSBC Holdings. In addition to that, Foresight Environmental is 1.97 times more volatile than HSBC Holdings PLC. It trades about -0.28 of its total potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.43 per unit of volatility. If you would invest 78,450 in HSBC Holdings PLC on November 5, 2024 and sell it today you would earn a total of 6,120 from holding HSBC Holdings PLC or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foresight Environmental Infras vs. HSBC Holdings PLC
Performance |
| Timeline |
| Foresight Environmental |
| HSBC Holdings PLC |
Foresight Environmental and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foresight Environmental and HSBC Holdings
The main advantage of trading using opposite Foresight Environmental and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foresight Environmental 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.| Foresight Environmental vs. Cairn Homes PLC | Foresight Environmental vs. Rosslyn Data Technologies | Foresight Environmental vs. Public Storage | Foresight Environmental vs. Silver Bullet Data |
| HSBC Holdings vs. Induction Healthcare Group | HSBC Holdings vs. Gamma Communications PLC | HSBC Holdings vs. PureTech Health plc | HSBC Holdings vs. Orient Telecoms |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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