Correlation Between HSBC Holdings and Promotora
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Promotora 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 Promotora 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 Promotora y Operadora, you can compare the effects of market volatilities on HSBC Holdings and Promotora 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 Promotora. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Promotora.
Diversification Opportunities for HSBC Holdings and Promotora
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and Promotora is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Promotora y Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora y Operadora 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 Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora y Operadora has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Promotora go up and down completely randomly.
Pair Corralation between HSBC Holdings and Promotora
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.92 times more return on investment than Promotora. However, HSBC Holdings plc is 1.08 times less risky than Promotora. It trades about 0.07 of its potential returns per unit of risk. Promotora y Operadora is currently generating about 0.03 per unit of risk. If you would invest 57,167 in HSBC Holdings plc on September 4, 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 Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
HSBC Holdings plc vs. Promotora y Operadora
Performance |
| Timeline |
| HSBC Holdings plc |
| Promotora y Operadora |
HSBC Holdings and Promotora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Promotora
The main advantage of trading using opposite HSBC Holdings and Promotora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Promotora 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 Promotora will offset losses from the drop in Promotora's long position.| HSBC Holdings vs. United States Steel | HSBC Holdings vs. FIBRA Storage | HSBC Holdings vs. Micron Technology | HSBC Holdings vs. Delta Air Lines |
| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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