Correlation Between HSBC Holdings and So Carlos
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and So Carlos 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 So Carlos 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 So Carlos Empreendimentos, you can compare the effects of market volatilities on HSBC Holdings and So Carlos 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 So Carlos. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and So Carlos.
Diversification Opportunities for HSBC Holdings and So Carlos
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and SCAR3 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and So Carlos Empreendimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Carlos 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 So Carlos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Carlos Empreendimentos has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and So Carlos go up and down completely randomly.
Pair Corralation between HSBC Holdings and So Carlos
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.59 times more return on investment than So Carlos. However, HSBC Holdings plc is 1.69 times less risky than So Carlos. It trades about 0.12 of its potential returns per unit of risk. So Carlos Empreendimentos is currently generating about 0.03 per unit of risk. If you would invest 3,849 in HSBC Holdings plc on November 27, 2024 and sell it today you would earn a total of 4,175 from holding HSBC Holdings plc or generate 108.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.23% |
| Values | Daily Returns |
HSBC Holdings plc vs. So Carlos Empreendimentos
Performance |
| Timeline |
| HSBC Holdings plc |
| So Carlos Empreendimentos |
HSBC Holdings and So Carlos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and So Carlos
The main advantage of trading using opposite HSBC Holdings and So Carlos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, So Carlos 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 So Carlos will offset losses from the drop in So Carlos' long position.| HSBC Holdings vs. ON Semiconductor | HSBC Holdings vs. United Airlines Holdings | HSBC Holdings vs. Nordon Indstrias Metalrgicas | HSBC Holdings vs. Liberty Broadband |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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