Correlation Between Hong Kong and Bolsa Mexicana
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Bolsa Mexicana 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 Hong Kong and Bolsa Mexicana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Exchanges and Bolsa Mexicana de, you can compare the effects of market volatilities on Hong Kong and Bolsa Mexicana 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 Hong Kong with a short position of Bolsa Mexicana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Bolsa Mexicana.
Diversification Opportunities for Hong Kong and Bolsa Mexicana
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hong and Bolsa is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchanges and Bolsa Mexicana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsa Mexicana de and Hong Kong 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 Hong Kong Exchanges are associated (or correlated) with Bolsa Mexicana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsa Mexicana de has no effect on the direction of Hong Kong i.e., Hong Kong and Bolsa Mexicana go up and down completely randomly.
Pair Corralation between Hong Kong and Bolsa Mexicana
Assuming the 90 days trading horizon Hong Kong is expected to generate 1.04 times less return on investment than Bolsa Mexicana. But when comparing it to its historical volatility, Hong Kong Exchanges is 1.7 times less risky than Bolsa Mexicana. It trades about 0.06 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Bolsa Mexicana de on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Bolsa Mexicana de or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hong Kong Exchanges vs. Bolsa Mexicana de
Performance |
| Timeline |
| Hong Kong Exchanges |
| Bolsa Mexicana de |
Hong Kong and Bolsa Mexicana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Bolsa Mexicana
The main advantage of trading using opposite Hong Kong and Bolsa Mexicana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Bolsa Mexicana 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 Bolsa Mexicana will offset losses from the drop in Bolsa Mexicana's long position.| Hong Kong vs. Ares Management Corp | Hong Kong vs. Jupiter Fund Management | Hong Kong vs. Brockhaus Capital Management | Hong Kong vs. AGF Management Limited |
| Bolsa Mexicana vs. CME Group | Bolsa Mexicana vs. Intercontinental Exchange | Bolsa Mexicana vs. Hong Kong Exchanges | Bolsa Mexicana vs. London Stock Exchange |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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