Correlation Between HSBC Holdings and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Agricultural 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 Agricultural 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 Agricultural Bank of, you can compare the effects of market volatilities on HSBC Holdings and Agricultural 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Agricultural Bank.
Diversification Opportunities for HSBC Holdings and Agricultural Bank
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and Agricultural is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Agricultural Bank go up and down completely randomly.
Pair Corralation between HSBC Holdings and Agricultural Bank
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 3.2 times less return on investment than Agricultural Bank. But when comparing it to its historical volatility, HSBC Holdings plc is 6.12 times less risky than Agricultural Bank. It trades about 0.36 of its potential returns per unit of risk. Agricultural Bank of is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Agricultural Bank of on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Agricultural Bank of or generate 22.5% 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. Agricultural Bank of
Performance |
| Timeline |
| HSBC Holdings plc |
| Agricultural Bank |
HSBC Holdings and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Agricultural Bank
The main advantage of trading using opposite HSBC Holdings and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Agricultural 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.| HSBC Holdings vs. Agricultural Bank of | HSBC Holdings vs. Commonwealth Bank of | HSBC Holdings vs. Superior Plus Corp | HSBC Holdings vs. SIVERS SEMICONDUCTORS AB |
| Agricultural Bank vs. Commonwealth Bank of | Agricultural Bank vs. Superior Plus Corp | Agricultural Bank vs. SIVERS SEMICONDUCTORS AB | Agricultural Bank vs. CHINA HUARONG ENERHD 50 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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