Correlation Between HK Electric and H FARM
Can any of the company-specific risk be diversified away by investing in both HK Electric and H FARM 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 H FARM 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 H FARM SPA, you can compare the effects of market volatilities on HK Electric and H FARM 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 H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and H FARM.
Diversification Opportunities for HK Electric and H FARM
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HKT and 5JQ is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of HK Electric i.e., HK Electric and H FARM go up and down completely randomly.
Pair Corralation between HK Electric and H FARM
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.64 times more return on investment than H FARM. However, HK Electric Investments is 1.57 times less risky than H FARM. It trades about 0.1 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.01 per unit of risk. If you would invest 17.00 in HK Electric Investments on October 11, 2024 and sell it today you would earn a total of 48.00 from holding HK Electric Investments or generate 282.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. H FARM SPA
Performance |
| Timeline |
| HK Electric Investments |
| H FARM SPA |
HK Electric and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and H FARM
The main advantage of trading using opposite HK Electric and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| HK Electric vs. Ameriprise Financial | HK Electric vs. Broadwind | HK Electric vs. TITANIUM TRANSPORTGROUP | HK Electric vs. Direct Line Insurance |
| H FARM vs. DIVERSIFIED ROYALTY | H FARM vs. United Rentals | H FARM vs. HK Electric Investments | H FARM vs. GRENKELEASING Dusseldorf |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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