Correlation Between HSBC Holdings and Banco Do
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Banco Do 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 HSBC Holdings and Banco Do into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and Banco do Estado, you can compare the effects of market volatilities on HSBC Holdings and Banco Do 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 HSBC Holdings with a short position of Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Banco Do.
Diversification Opportunities for HSBC Holdings and Banco Do
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and Banco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Banco do Estado in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco do Estado and HSBC Holdings 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 HSBC Holdings plc are associated (or correlated) with Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco do Estado has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Banco Do go up and down completely randomly.
Pair Corralation between HSBC Holdings and Banco Do
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.63 times more return on investment than Banco Do. However, HSBC Holdings plc is 1.6 times less risky than Banco Do. It trades about 0.22 of its potential returns per unit of risk. Banco do Estado is currently generating about 0.0 per unit of risk. If you would invest 6,385 in HSBC Holdings plc on August 28, 2024 and sell it today you would earn a total of 405.00 from holding HSBC Holdings plc or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Banco do Estado
Performance |
| Timeline |
| HSBC Holdings plc |
| Banco do Estado |
HSBC Holdings and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Banco Do
The main advantage of trading using opposite HSBC Holdings and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Banco Do 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 Banco Do will offset losses from the drop in Banco Do's long position.| HSBC Holdings vs. BTG Pactual Logstica | HSBC Holdings vs. Plano Plano Desenvolvimento | HSBC Holdings vs. Cable One | HSBC Holdings vs. ATMA Participaes SA |
| Banco Do vs. Banco Alfa de | Banco Do vs. Banestes SA | Banco Do vs. Banco da Amaznia | Banco Do vs. Financeira Alfa SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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