Correlation Between HK Electric and Air Liquide
Can any of the company-specific risk be diversified away by investing in both HK Electric and Air Liquide 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 Air Liquide 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 Air Liquide SA, you can compare the effects of market volatilities on HK Electric and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Air Liquide.
Diversification Opportunities for HK Electric and Air Liquide
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HKT and Air is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of HK Electric i.e., HK Electric and Air Liquide go up and down completely randomly.
Pair Corralation between HK Electric and Air Liquide
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.84 times more return on investment than Air Liquide. However, HK Electric Investments is 1.19 times less risky than Air Liquide. It trades about 0.09 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.08 per unit of risk. If you would invest 60.00 in HK Electric Investments on September 12, 2024 and sell it today you would earn a total of 3.00 from holding HK Electric Investments or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Air Liquide SA
Performance |
| Timeline |
| HK Electric Investments |
| Air Liquide SA |
HK Electric and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Air Liquide
The main advantage of trading using opposite HK Electric and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Air Liquide vs. HYDROFARM HLD GRP | Air Liquide vs. DAIRY FARM INTL | Air Liquide vs. Sumitomo Mitsui Construction | Air Liquide vs. Hanison Construction Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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