Correlation Between Hong Kong and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on Hong Kong and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Spirent Communications.
Diversification Opportunities for Hong Kong and Spirent Communications
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hong and Spirent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Hong Kong i.e., Hong Kong and Spirent Communications go up and down completely randomly.
Pair Corralation between Hong Kong and Spirent Communications
Assuming the 90 days trading horizon Hong Kong Land is expected to generate 0.09 times more return on investment than Spirent Communications. However, Hong Kong Land is 11.32 times less risky than Spirent Communications. It trades about 0.09 of its potential returns per unit of risk. Spirent Communications plc is currently generating about -0.03 per unit of risk. If you would invest 735.00 in Hong Kong Land on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Hong Kong Land or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong Land vs. Spirent Communications plc
Performance |
| Timeline |
| Hong Kong Land |
| Spirent Communications |
Hong Kong and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Spirent Communications
The main advantage of trading using opposite Hong Kong and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Hong Kong vs. Neometals | Hong Kong vs. McEwen Mining | Hong Kong vs. CompuGroup Medical AG | Hong Kong vs. Wheaton Precious Metals |
| Spirent Communications vs. CVS Health Corp | Spirent Communications vs. Cardinal Health | Spirent Communications vs. Planet Fitness Cl | Spirent Communications vs. Federal Realty Investment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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