Correlation Between Hong Kong and Global Net
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Global Net 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 Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Land and Global Net Lease, you can compare the effects of market volatilities on Hong Kong and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Global Net.
Diversification Opportunities for Hong Kong and Global Net
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hong and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Land are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Hong Kong i.e., Hong Kong and Global Net go up and down completely randomly.
Pair Corralation between Hong Kong and Global Net
Assuming the 90 days trading horizon Hong Kong Land is expected to generate 0.05 times more return on investment than Global Net. However, Hong Kong Land is 19.96 times less risky than Global Net. It trades about 0.08 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.01 per unit of risk. If you would invest 713.00 in Hong Kong Land on September 12, 2024 and sell it today you would earn a total of 28.00 from holding Hong Kong Land or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.44% |
| Values | Daily Returns |
Hong Kong Land vs. Global Net Lease
Performance |
| Timeline |
| Hong Kong Land |
| Global Net Lease |
Hong Kong and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Global Net
The main advantage of trading using opposite Hong Kong and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Hong Kong vs. Wheaton Precious Metals | Hong Kong vs. Universal Display Corp | Hong Kong vs. Zoom Video Communications | Hong Kong vs. Cornish Metals |
| Global Net vs. Hong Kong Land | Global Net vs. Neometals | Global Net vs. Coor Service Management | Global Net vs. Fidelity Sustainable USD |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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