Correlation Between HSBC Holdings and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Companhia Energtica 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 Energtica 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 Energtica de, you can compare the effects of market volatilities on HSBC Holdings and Companhia Energtica 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 Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Companhia Energtica.
Diversification Opportunities for HSBC Holdings and Companhia Energtica
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and Companhia is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica 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 Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Companhia Energtica go up and down completely randomly.
Pair Corralation between HSBC Holdings and Companhia Energtica
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.75 times more return on investment than Companhia Energtica. However, HSBC Holdings plc is 1.34 times less risky than Companhia Energtica. It trades about 0.07 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.01 per unit of risk. If you would invest 57,167 in HSBC Holdings plc on September 2, 2024 and sell it today you would earn a total of 36,333 from holding HSBC Holdings plc or generate 63.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Companhia Energtica de
Performance |
| Timeline |
| HSBC Holdings plc |
| Companhia Energtica |
HSBC Holdings and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Companhia Energtica
The main advantage of trading using opposite HSBC Holdings and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Companhia Energtica 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 Energtica will offset losses from the drop in Companhia Energtica's long position.| HSBC Holdings vs. First Majestic Silver | HSBC Holdings vs. United States Steel | HSBC Holdings vs. Cognizant Technology Solutions | HSBC Holdings vs. Taiwan Semiconductor Manufacturing |
| Companhia Energtica vs. United States Steel | Companhia Energtica vs. Southern Copper | Companhia Energtica vs. New Oriental Education | Companhia Energtica vs. Deutsche Bank 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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