Correlation Between HK Electric and Postal Savings
Can any of the company-specific risk be diversified away by investing in both HK Electric and Postal Savings 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 Postal Savings 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 Postal Savings Bank, you can compare the effects of market volatilities on HK Electric and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Postal Savings.
Diversification Opportunities for HK Electric and Postal Savings
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HKT and Postal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of HK Electric i.e., HK Electric and Postal Savings go up and down completely randomly.
Pair Corralation between HK Electric and Postal Savings
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.41 times more return on investment than Postal Savings. However, HK Electric Investments is 2.44 times less risky than Postal Savings. It trades about 0.1 of its potential returns per unit of risk. Postal Savings Bank is currently generating about -0.03 per unit of risk. If you would invest 62.00 in HK Electric Investments on August 25, 2024 and sell it today you would earn a total of 1.00 from holding HK Electric Investments or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Postal Savings Bank
Performance |
| Timeline |
| HK Electric Investments |
| Postal Savings Bank |
HK Electric and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Postal Savings
The main advantage of trading using opposite HK Electric and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Postal Savings vs. Deutsche Bank Aktiengesellschaft | Postal Savings vs. Superior Plus Corp | Postal Savings vs. NMI Holdings | Postal Savings vs. Origin Agritech |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |