Correlation Between HSBC Holdings and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Aozora Bank 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 Aozora Bank 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 Aozora Bank, you can compare the effects of market volatilities on HSBC Holdings and Aozora Bank 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 Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Aozora Bank.
Diversification Opportunities for HSBC Holdings and Aozora Bank
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HSBC and Aozora is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank 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 Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Aozora Bank go up and down completely randomly.
Pair Corralation between HSBC Holdings and Aozora Bank
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.77 times more return on investment than Aozora Bank. However, HSBC Holdings plc is 1.3 times less risky than Aozora Bank. It trades about 0.08 of its potential returns per unit of risk. Aozora Bank is currently generating about 0.0 per unit of risk. If you would invest 2,449 in HSBC Holdings plc on September 3, 2024 and sell it today you would earn a total of 1,951 from holding HSBC Holdings plc or generate 79.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Aozora Bank
Performance |
| Timeline |
| HSBC Holdings plc |
| Aozora Bank |
HSBC Holdings and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Aozora Bank
The main advantage of trading using opposite HSBC Holdings and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| HSBC Holdings vs. CeoTronics AG | HSBC Holdings vs. Cogent Communications Holdings | HSBC Holdings vs. SHIP HEALTHCARE HLDGINC | HSBC Holdings vs. INTERSHOP Communications Aktiengesellschaft |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |