Correlation Between HK Electric and Berkshire Hathaway
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By analyzing existing cross correlation between HK Electric Investments and Berkshire Hathaway, you can compare the effects of market volatilities on HK Electric and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Berkshire Hathaway.
Diversification Opportunities for HK Electric and Berkshire Hathaway
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Berkshire is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of HK Electric i.e., HK Electric and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between HK Electric and Berkshire Hathaway
Assuming the 90 days trading horizon HK Electric is expected to generate 5.72 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, HK Electric Investments is 2.33 times less risky than Berkshire Hathaway. It trades about 0.1 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 41,850 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 4,080 from holding Berkshire Hathaway or generate 9.75% 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. Berkshire Hathaway
Performance |
| Timeline |
| HK Electric Investments |
| Berkshire Hathaway |
HK Electric and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Berkshire Hathaway
The main advantage of trading using opposite HK Electric and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Berkshire Hathaway vs. HK Electric Investments | Berkshire Hathaway vs. ECHO INVESTMENT ZY | Berkshire Hathaway vs. PennyMac Mortgage Investment | Berkshire Hathaway vs. Gladstone Investment |
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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