Correlation Between HK Electric and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both HK Electric and Gladstone Investment 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 HK Electric and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Gladstone Investment, you can compare the effects of market volatilities on HK Electric and Gladstone Investment 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 HK Electric with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Gladstone Investment.
Diversification Opportunities for HK Electric and Gladstone Investment
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between HKT and Gladstone is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and HK Electric 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 HK Electric Investments are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of HK Electric i.e., HK Electric and Gladstone Investment go up and down completely randomly.
Pair Corralation between HK Electric and Gladstone Investment
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the Gladstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 3.7 times less risky than Gladstone Investment. The stock trades about -0.22 of its potential returns per unit of risk. The Gladstone Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,258 in Gladstone Investment on November 7, 2024 and sell it today you would earn a total of 12.00 from holding Gladstone Investment or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Gladstone Investment
Performance |
| Timeline |
| HK Electric Investments |
| Gladstone Investment |
HK Electric and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Gladstone Investment
The main advantage of trading using opposite HK Electric and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| HK Electric vs. COSMOSTEEL HLDGS | HK Electric vs. Dentsply Sirona | HK Electric vs. TRADELINK ELECTRON | HK Electric vs. TRADEDOUBLER AB SK |
| Gladstone Investment vs. MOLSON RS BEVERAGE | Gladstone Investment vs. Verizon Communications | Gladstone Investment vs. ecotel communication ag | Gladstone Investment vs. Hemisphere Energy Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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