Correlation Between G III and HK Electric
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and HK Electric Investments, you can compare the effects of market volatilities on G III 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 G III with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and HK Electric.
Diversification Opportunities for G III and HK Electric
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between GI4 and HKT is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group 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 G III 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 G III Apparel Group 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 G III i.e., G III and HK Electric go up and down completely randomly.
Pair Corralation between G III and HK Electric
Assuming the 90 days trading horizon G III Apparel Group is expected to under-perform the HK Electric. In addition to that, G III is 2.6 times more volatile than HK Electric Investments. It trades about -0.24 of its total potential returns per unit of risk. HK Electric Investments is currently generating about 0.09 per unit of volatility. If you would invest 64.00 in HK Electric Investments on November 27, 2024 and sell it today you would earn a total of 1.00 from holding HK Electric Investments or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. HK Electric Investments
Performance |
| Timeline |
| G III Apparel |
| HK Electric Investments |
G III and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and HK Electric
The main advantage of trading using opposite G III and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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.| G III vs. Gol Intelligent Airlines | G III vs. Singapore Airlines Limited | G III vs. Algonquin Power Utilities | G III vs. Dentsply Sirona |
| HK Electric vs. Transport International Holdings | HK Electric vs. COLUMBIA SPORTSWEAR | HK Electric vs. SOEDER SPORTFISKE AB | HK Electric vs. Firan Technology Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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