Correlation Between HK Electric and Pure Storage
Can any of the company-specific risk be diversified away by investing in both HK Electric and Pure Storage 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 Pure Storage 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 Pure Storage, you can compare the effects of market volatilities on HK Electric and Pure Storage 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 Pure Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Pure Storage.
Diversification Opportunities for HK Electric and Pure Storage
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Pure is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage 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 Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of HK Electric i.e., HK Electric and Pure Storage go up and down completely randomly.
Pair Corralation between HK Electric and Pure Storage
Assuming the 90 days trading horizon HK Electric is expected to generate 1.26 times less return on investment than Pure Storage. But when comparing it to its historical volatility, HK Electric Investments is 2.49 times less risky than Pure Storage. It trades about 0.17 of its potential returns per unit of risk. Pure Storage is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,068 in Pure Storage on October 10, 2024 and sell it today you would earn a total of 215.00 from holding Pure Storage or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Pure Storage
Performance |
| Timeline |
| HK Electric Investments |
| Pure Storage |
HK Electric and Pure Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Pure Storage
The main advantage of trading using opposite HK Electric and Pure Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Pure Storage 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 Pure Storage will offset losses from the drop in Pure Storage's long position.| HK Electric vs. Ameriprise Financial | HK Electric vs. Broadwind | HK Electric vs. TITANIUM TRANSPORTGROUP | HK Electric vs. Direct Line Insurance |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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