Correlation Between HK Electric and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both HK Electric and AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING, you can compare the effects of market volatilities on HK Electric and AOYAMA TRADING 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 AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and AOYAMA TRADING.
Diversification Opportunities for HK Electric and AOYAMA TRADING
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and AOYAMA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of HK Electric i.e., HK Electric and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between HK Electric and AOYAMA TRADING
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.29 times more return on investment than AOYAMA TRADING. However, HK Electric Investments is 3.5 times less risky than AOYAMA TRADING. It trades about -0.22 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about -0.15 per unit of risk. If you would invest 65.00 in HK Electric Investments on November 1, 2024 and sell it today you would lose (1.00) from holding HK Electric Investments or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. AOYAMA TRADING
Performance |
| Timeline |
| HK Electric Investments |
| AOYAMA TRADING |
HK Electric and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and AOYAMA TRADING
The main advantage of trading using opposite HK Electric and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| HK Electric vs. Zoom Video Communications | HK Electric vs. GungHo Online Entertainment | HK Electric vs. BOS BETTER ONLINE | HK Electric vs. PACIFIC ONLINE |
| AOYAMA TRADING vs. DIVERSIFIED ROYALTY | AOYAMA TRADING vs. HK Electric Investments | AOYAMA TRADING vs. CDL INVESTMENT | AOYAMA TRADING vs. SLR Investment Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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