Correlation Between HK Electric and Amazon
Can any of the company-specific risk be diversified away by investing in both HK Electric and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on HK Electric and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Amazon.
Diversification Opportunities for HK Electric and Amazon
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Amazon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of HK Electric i.e., HK Electric and Amazon go up and down completely randomly.
Pair Corralation between HK Electric and Amazon
Assuming the 90 days trading horizon HK Electric is expected to generate 158.33 times less return on investment than Amazon. But when comparing it to its historical volatility, HK Electric Investments is 2.48 times less risky than Amazon. It trades about 0.0 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 17,516 in Amazon Inc on August 29, 2024 and sell it today you would earn a total of 2,138 from holding Amazon Inc or generate 12.21% 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. Amazon Inc
Performance |
| Timeline |
| HK Electric Investments |
| Amazon Inc |
HK Electric and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Amazon
The main advantage of trading using opposite HK Electric and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Amazon vs. Gladstone Investment | Amazon vs. REINET INVESTMENTS SCA | Amazon vs. SLR Investment Corp | Amazon vs. HK Electric Investments |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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