Correlation Between HSBC Holdings and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Companhia Paranaense 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 Companhia Paranaense 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 Companhia Paranaense de, you can compare the effects of market volatilities on HSBC Holdings and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Companhia Paranaense.
Diversification Opportunities for HSBC Holdings and Companhia Paranaense
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and Companhia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Companhia Paranaense go up and down completely randomly.
Pair Corralation between HSBC Holdings and Companhia Paranaense
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 1.6 times less return on investment than Companhia Paranaense. But when comparing it to its historical volatility, HSBC Holdings plc is 2.27 times less risky than Companhia Paranaense. It trades about 0.09 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 148.00 in Companhia Paranaense de on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Companhia Paranaense de or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Companhia Paranaense de
Performance |
| Timeline |
| HSBC Holdings plc |
| Companhia Paranaense |
HSBC Holdings and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Companhia Paranaense
The main advantage of trading using opposite HSBC Holdings and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| HSBC Holdings vs. Agricultural Bank of | HSBC Holdings vs. Commonwealth Bank of | HSBC Holdings vs. Superior Plus Corp | HSBC Holdings vs. NMI Holdings |
| Companhia Paranaense vs. Addus HomeCare | Companhia Paranaense vs. ANGI Homeservices | Companhia Paranaense vs. Arrow Electronics | Companhia Paranaense vs. KB HOME |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |