Correlation Between HK Electric and MYFAIR GOLD
Can any of the company-specific risk be diversified away by investing in both HK Electric and MYFAIR GOLD 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 MYFAIR GOLD 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 MYFAIR GOLD P, you can compare the effects of market volatilities on HK Electric and MYFAIR GOLD 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 MYFAIR GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and MYFAIR GOLD.
Diversification Opportunities for HK Electric and MYFAIR GOLD
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between HKT and MYFAIR is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and MYFAIR GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYFAIR GOLD P 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 MYFAIR GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYFAIR GOLD P has no effect on the direction of HK Electric i.e., HK Electric and MYFAIR GOLD go up and down completely randomly.
Pair Corralation between HK Electric and MYFAIR GOLD
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.39 times more return on investment than MYFAIR GOLD. However, HK Electric Investments is 2.57 times less risky than MYFAIR GOLD. It trades about 0.03 of its potential returns per unit of risk. MYFAIR GOLD P is currently generating about 0.0 per unit of risk. If you would invest 50.00 in HK Electric Investments on January 11, 2025 and sell it today you would earn a total of 9.00 from holding HK Electric Investments or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. MYFAIR GOLD P
Performance |
| Timeline |
| HK Electric Investments |
| MYFAIR GOLD P |
HK Electric and MYFAIR GOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and MYFAIR GOLD
The main advantage of trading using opposite HK Electric and MYFAIR GOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, MYFAIR GOLD 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 MYFAIR GOLD will offset losses from the drop in MYFAIR GOLD's long position.| HK Electric vs. Suntory Beverage Food | HK Electric vs. RESMINING UNSPADR10 | HK Electric vs. Treasury Wine Estates | HK Electric vs. De Grey Mining |
| MYFAIR GOLD vs. Japan Post Insurance | MYFAIR GOLD vs. PANIN INSURANCE | MYFAIR GOLD vs. JIAHUA STORES | MYFAIR GOLD vs. UNIQA INSURANCE GR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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