Correlation Between HK Electric and VIRGIN WINES
Can any of the company-specific risk be diversified away by investing in both HK Electric and VIRGIN WINES 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 VIRGIN WINES 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 VIRGIN WINES UK, you can compare the effects of market volatilities on HK Electric and VIRGIN WINES 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 VIRGIN WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and VIRGIN WINES.
Diversification Opportunities for HK Electric and VIRGIN WINES
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between HKT and VIRGIN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and VIRGIN WINES UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRGIN WINES UK 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 VIRGIN WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRGIN WINES UK has no effect on the direction of HK Electric i.e., HK Electric and VIRGIN WINES go up and down completely randomly.
Pair Corralation between HK Electric and VIRGIN WINES
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.08 times more return on investment than VIRGIN WINES. However, HK Electric Investments is 13.07 times less risky than VIRGIN WINES. It trades about 0.08 of its potential returns per unit of risk. VIRGIN WINES UK is currently generating about -0.3 per unit of risk. If you would invest 64.00 in HK Electric Investments on November 29, 2024 and sell it today you would earn a total of 1.00 from holding HK Electric Investments or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. VIRGIN WINES UK
Performance |
| Timeline |
| HK Electric Investments |
| VIRGIN WINES UK |
HK Electric and VIRGIN WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and VIRGIN WINES
The main advantage of trading using opposite HK Electric and VIRGIN WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, VIRGIN WINES 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 VIRGIN WINES will offset losses from the drop in VIRGIN WINES's long position.| HK Electric vs. Cass Information Systems | HK Electric vs. ANGLO ASIAN MINING | HK Electric vs. Eurasia Mining Plc | HK Electric vs. Alibaba Health Information |
| VIRGIN WINES vs. Apyx Medical Corp | VIRGIN WINES vs. EIDESVIK OFFSHORE NK | VIRGIN WINES vs. American Airlines Group | VIRGIN WINES vs. Japan Medical Dynamic |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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