Correlation Between Hong Kong and GoldMining
Can any of the company-specific risk be diversified away by investing in both Hong Kong and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Hong Kong and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and GoldMining.
Diversification Opportunities for Hong Kong and GoldMining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hong and GoldMining is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Hong Kong i.e., Hong Kong and GoldMining go up and down completely randomly.
Pair Corralation between Hong Kong and GoldMining
Assuming the 90 days trading horizon Hong Kong is expected to generate 8.98 times less return on investment than GoldMining. But when comparing it to its historical volatility, Hong Kong Land is 26.96 times less risky than GoldMining. It trades about 0.08 of its potential returns per unit of risk. GoldMining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 119.00 in GoldMining on September 12, 2024 and sell it today you would earn a total of 6.00 from holding GoldMining or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 40.0% |
| Values | Daily Returns |
Hong Kong Land vs. GoldMining
Performance |
| Timeline |
| Hong Kong Land |
| GoldMining |
Hong Kong and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and GoldMining
The main advantage of trading using opposite Hong Kong and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining'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 |
| GoldMining vs. Hong Kong Land | GoldMining vs. Neometals | GoldMining vs. Coor Service Management | GoldMining 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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