Correlation Between HSBC Holdings and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Shin Etsu 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 Shin Etsu 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 Shin Etsu Chemical Co, you can compare the effects of market volatilities on HSBC Holdings and Shin Etsu 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 Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Shin Etsu.
Diversification Opportunities for HSBC Holdings and Shin Etsu
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and Shin is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical 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 Shin Etsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Shin Etsu go up and down completely randomly.
Pair Corralation between HSBC Holdings and Shin Etsu
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.7 times more return on investment than Shin Etsu. However, HSBC Holdings plc is 1.43 times less risky than Shin Etsu. It trades about 0.11 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.03 per unit of risk. If you would invest 3,259 in HSBC Holdings plc on November 8, 2024 and sell it today you would earn a total of 1,701 from holding HSBC Holdings plc or generate 52.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
HSBC Holdings plc vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| HSBC Holdings plc |
| Shin Etsu Chemical |
HSBC Holdings and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Shin Etsu
The main advantage of trading using opposite HSBC Holdings and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Shin Etsu 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 Shin Etsu will offset losses from the drop in Shin Etsu's long position.| HSBC Holdings vs. Actinogen Medical Limited | HSBC Holdings vs. Casio Computer CoLtd | HSBC Holdings vs. PEPTONIC MEDICAL | HSBC Holdings vs. Diamyd Medical AB |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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