Correlation Between HSBC Holdings and CVC Brasil
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and CVC Brasil 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 CVC Brasil 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 CVC Brasil Operadora, you can compare the effects of market volatilities on HSBC Holdings and CVC Brasil 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 CVC Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and CVC Brasil.
Diversification Opportunities for HSBC Holdings and CVC Brasil
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and CVC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and CVC Brasil Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Brasil Operadora 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 CVC Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Brasil Operadora has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and CVC Brasil go up and down completely randomly.
Pair Corralation between HSBC Holdings and CVC Brasil
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.97 times more return on investment than CVC Brasil. However, HSBC Holdings plc is 1.03 times less risky than CVC Brasil. It trades about 0.05 of its potential returns per unit of risk. CVC Brasil Operadora is currently generating about -0.01 per unit of risk. If you would invest 3,791 in HSBC Holdings plc on August 31, 2024 and sell it today you would earn a total of 3,149 from holding HSBC Holdings plc or generate 83.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.54% |
| Values | Daily Returns |
HSBC Holdings plc vs. CVC Brasil Operadora
Performance |
| Timeline |
| HSBC Holdings plc |
| CVC Brasil Operadora |
HSBC Holdings and CVC Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and CVC Brasil
The main advantage of trading using opposite HSBC Holdings and CVC Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, CVC Brasil 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 CVC Brasil will offset losses from the drop in CVC Brasil's long position.| HSBC Holdings vs. Unifique Telecomunicaes SA | HSBC Holdings vs. Charter Communications | HSBC Holdings vs. G2D Investments | HSBC Holdings vs. Taiwan Semiconductor Manufacturing |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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