Correlation Between Hong Kong and OPERA SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Hong Kong and OPERA SOFTWARE 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 OPERA SOFTWARE 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 OPERA SOFTWARE, you can compare the effects of market volatilities on Hong Kong and OPERA SOFTWARE 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 OPERA SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and OPERA SOFTWARE.
Diversification Opportunities for Hong Kong and OPERA SOFTWARE
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hong and OPERA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchanges and OPERA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERA SOFTWARE 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 OPERA SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERA SOFTWARE has no effect on the direction of Hong Kong i.e., Hong Kong and OPERA SOFTWARE go up and down completely randomly.
Pair Corralation between Hong Kong and OPERA SOFTWARE
Assuming the 90 days trading horizon Hong Kong Exchanges is expected to under-perform the OPERA SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Hong Kong Exchanges is 1.06 times less risky than OPERA SOFTWARE. The stock trades about -0.07 of its potential returns per unit of risk. The OPERA SOFTWARE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 61.00 in OPERA SOFTWARE on October 25, 2024 and sell it today you would earn a total of 3.00 from holding OPERA SOFTWARE or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong Exchanges vs. OPERA SOFTWARE
Performance |
| Timeline |
| Hong Kong Exchanges |
| OPERA SOFTWARE |
Hong Kong and OPERA SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and OPERA SOFTWARE
The main advantage of trading using opposite Hong Kong and OPERA SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, OPERA SOFTWARE 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 OPERA SOFTWARE will offset losses from the drop in OPERA SOFTWARE's long position.| Hong Kong vs. Broadridge Financial Solutions | Hong Kong vs. KINGBOARD CHEMICAL | Hong Kong vs. Liberty Broadband | Hong Kong vs. Shin Etsu Chemical Co |
| OPERA SOFTWARE vs. Apple Inc | OPERA SOFTWARE vs. Apple Inc | OPERA SOFTWARE vs. Apple Inc | OPERA SOFTWARE vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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