Correlation Between HSBC Holdings and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard SA, you can compare the effects of market volatilities on HSBC Holdings and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Pernod Ricard.
Diversification Opportunities for HSBC Holdings and Pernod Ricard
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between HSBC and Pernod is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Pernod Ricard go up and down completely randomly.
Pair Corralation between HSBC Holdings and Pernod Ricard
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.63 times more return on investment than Pernod Ricard. However, HSBC Holdings plc is 1.59 times less risky than Pernod Ricard. It trades about 0.27 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about 0.05 per unit of risk. If you would invest 4,680 in HSBC Holdings plc on November 3, 2024 and sell it today you would earn a total of 320.00 from holding HSBC Holdings plc or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HSBC Holdings plc vs. Pernod Ricard SA
Performance |
| Timeline |
| HSBC Holdings plc |
| Pernod Ricard SA |
HSBC Holdings and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Pernod Ricard
The main advantage of trading using opposite HSBC Holdings and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| HSBC Holdings vs. PACIFIC ONLINE | HSBC Holdings vs. Transport International Holdings | HSBC Holdings vs. JD SPORTS FASH | HSBC Holdings vs. COLUMBIA SPORTSWEAR |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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