Correlation Between HSBC Holdings and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Nomura 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 HSBC Holdings and Nomura Holdings 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 Nomura Holdings, you can compare the effects of market volatilities on HSBC Holdings and Nomura 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 HSBC Holdings with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Nomura Holdings.
Diversification Opportunities for HSBC Holdings and Nomura Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Nomura is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Nomura Holdings go up and down completely randomly.
Pair Corralation between HSBC Holdings and Nomura Holdings
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.6 times more return on investment than Nomura Holdings. However, HSBC Holdings plc is 1.66 times less risky than Nomura Holdings. It trades about 0.12 of its potential returns per unit of risk. Nomura Holdings is currently generating about 0.06 per unit of risk. If you would invest 5,727 in HSBC Holdings plc on September 3, 2024 and sell it today you would earn a total of 1,376 from holding HSBC Holdings plc or generate 24.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Nomura Holdings
Performance |
| Timeline |
| HSBC Holdings plc |
| Nomura Holdings |
HSBC Holdings and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Nomura Holdings
The main advantage of trading using opposite HSBC Holdings and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Nomura 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.| HSBC Holdings vs. Uber Technologies | HSBC Holdings vs. Agilent Technologies | HSBC Holdings vs. Dell Technologies | HSBC Holdings vs. Palantir Technologies |
| Nomura Holdings vs. HDFC Bank Limited | Nomura Holdings vs. Bemobi Mobile Tech | Nomura Holdings vs. Zoom Video Communications | Nomura Holdings vs. Charter Communications |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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