Correlation Between HSBC Holdings and FibraHotel
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and FibraHotel 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 FibraHotel 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 FibraHotel, you can compare the effects of market volatilities on HSBC Holdings and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and FibraHotel.
Diversification Opportunities for HSBC Holdings and FibraHotel
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and FibraHotel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and FibraHotel go up and down completely randomly.
Pair Corralation between HSBC Holdings and FibraHotel
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.1 times more return on investment than FibraHotel. However, HSBC Holdings plc is 9.91 times less risky than FibraHotel. It trades about 0.22 of its potential returns per unit of risk. FibraHotel is currently generating about 0.01 per unit of risk. If you would invest 92,494 in HSBC Holdings plc on September 2, 2024 and sell it today you would earn a total of 1,006 from holding HSBC Holdings plc or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
HSBC Holdings plc vs. FibraHotel
Performance |
| Timeline |
| HSBC Holdings plc |
| FibraHotel |
HSBC Holdings and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and FibraHotel
The main advantage of trading using opposite HSBC Holdings and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel'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 |
| FibraHotel vs. Lloyds Banking Group | FibraHotel vs. United States Steel | FibraHotel vs. Capital One Financial | FibraHotel vs. Micron Technology |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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