Correlation Between HK Electric and ELEMENT FLEET
Can any of the company-specific risk be diversified away by investing in both HK Electric and ELEMENT FLEET 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 ELEMENT FLEET 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 ELEMENT FLEET MGMT, you can compare the effects of market volatilities on HK Electric and ELEMENT FLEET 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 ELEMENT FLEET. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and ELEMENT FLEET.
Diversification Opportunities for HK Electric and ELEMENT FLEET
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HKT and ELEMENT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and ELEMENT FLEET MGMT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEMENT FLEET MGMT 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 ELEMENT FLEET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEMENT FLEET MGMT has no effect on the direction of HK Electric i.e., HK Electric and ELEMENT FLEET go up and down completely randomly.
Pair Corralation between HK Electric and ELEMENT FLEET
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.63 times more return on investment than ELEMENT FLEET. However, HK Electric is 1.63 times more volatile than ELEMENT FLEET MGMT. It trades about 0.09 of its potential returns per unit of risk. ELEMENT FLEET MGMT is currently generating about 0.06 per unit of risk. If you would invest 17.00 in HK Electric Investments on September 14, 2024 and sell it today you would earn a total of 46.00 from holding HK Electric Investments or generate 270.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. ELEMENT FLEET MGMT
Performance |
| Timeline |
| HK Electric Investments |
| ELEMENT FLEET MGMT |
HK Electric and ELEMENT FLEET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and ELEMENT FLEET
The main advantage of trading using opposite HK Electric and ELEMENT FLEET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, ELEMENT FLEET 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 ELEMENT FLEET will offset losses from the drop in ELEMENT FLEET's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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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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