Correlation Between HSBC Holdings and EZTEC Empreendimentos
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and EZTEC Empreendimentos 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 EZTEC Empreendimentos 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 EZTEC Empreendimentos e, you can compare the effects of market volatilities on HSBC Holdings and EZTEC Empreendimentos 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 EZTEC Empreendimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and EZTEC Empreendimentos.
Diversification Opportunities for HSBC Holdings and EZTEC Empreendimentos
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and EZTEC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and EZTEC Empreendimentos e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZTEC Empreendimentos 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 EZTEC Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZTEC Empreendimentos has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and EZTEC Empreendimentos go up and down completely randomly.
Pair Corralation between HSBC Holdings and EZTEC Empreendimentos
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 1.97 times less return on investment than EZTEC Empreendimentos. But when comparing it to its historical volatility, HSBC Holdings plc is 2.14 times less risky than EZTEC Empreendimentos. It trades about 0.16 of its potential returns per unit of risk. EZTEC Empreendimentos e is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,284 in EZTEC Empreendimentos e on August 30, 2024 and sell it today you would earn a total of 105.00 from holding EZTEC Empreendimentos e or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. EZTEC Empreendimentos e
Performance |
| Timeline |
| HSBC Holdings plc |
| EZTEC Empreendimentos |
HSBC Holdings and EZTEC Empreendimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and EZTEC Empreendimentos
The main advantage of trading using opposite HSBC Holdings and EZTEC Empreendimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, EZTEC Empreendimentos 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 EZTEC Empreendimentos will offset losses from the drop in EZTEC Empreendimentos' long position.| HSBC Holdings vs. United Airlines Holdings | HSBC Holdings vs. Ameriprise Financial | HSBC Holdings vs. Deutsche Bank Aktiengesellschaft | HSBC Holdings vs. Mitsubishi UFJ Financial |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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