Correlation Between Hong Kong and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Hong Kong and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on Hong Kong and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and International Consolidated.
Diversification Opportunities for Hong Kong and International Consolidated
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hong and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Hong Kong i.e., Hong Kong and International Consolidated go up and down completely randomly.
Pair Corralation between Hong Kong and International Consolidated
Assuming the 90 days trading horizon Hong Kong is expected to generate 17.49 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Hong Kong Land is 14.01 times less risky than International Consolidated. It trades about 0.08 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15,221 in International Consolidated Airlines on September 12, 2024 and sell it today you would earn a total of 12,979 from holding International Consolidated Airlines or generate 85.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Hong Kong Land vs. International Consolidated Air
Performance |
| Timeline |
| Hong Kong Land |
| International Consolidated |
Hong Kong and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and International Consolidated
The main advantage of trading using opposite Hong Kong and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated'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 |
| International Consolidated vs. Hong Kong Land | International Consolidated vs. Neometals | International Consolidated vs. Coor Service Management | International Consolidated 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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