Correlation Between HK Electric and Bridgestone
Can any of the company-specific risk be diversified away by investing in both HK Electric and Bridgestone 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 Bridgestone 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 Bridgestone, you can compare the effects of market volatilities on HK Electric and Bridgestone 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 Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Bridgestone.
Diversification Opportunities for HK Electric and Bridgestone
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HKT and Bridgestone is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone 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 Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of HK Electric i.e., HK Electric and Bridgestone go up and down completely randomly.
Pair Corralation between HK Electric and Bridgestone
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the Bridgestone. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 4.46 times less risky than Bridgestone. The stock trades about -0.22 of its potential returns per unit of risk. The Bridgestone is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,590 in Bridgestone on November 5, 2024 and sell it today you would earn a total of 80.00 from holding Bridgestone or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Bridgestone
Performance |
| Timeline |
| HK Electric Investments |
| Bridgestone |
HK Electric and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Bridgestone
The main advantage of trading using opposite HK Electric and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| HK Electric vs. MPH Health Care | HK Electric vs. Wenzhou Kangning Hospital | HK Electric vs. CanSino Biologics | HK Electric vs. CEOTRONICS |
| Bridgestone vs. ASURE SOFTWARE | Bridgestone vs. INTER CARS SA | Bridgestone vs. CyberArk Software | Bridgestone vs. PSI Software AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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