Correlation Between HK Electric and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both HK Electric and Burlington Stores 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 Burlington Stores 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 Burlington Stores, you can compare the effects of market volatilities on HK Electric and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Burlington Stores.
Diversification Opportunities for HK Electric and Burlington Stores
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Burlington is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of HK Electric i.e., HK Electric and Burlington Stores go up and down completely randomly.
Pair Corralation between HK Electric and Burlington Stores
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the Burlington Stores. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 4.54 times less risky than Burlington Stores. The stock trades about -0.22 of its potential returns per unit of risk. The Burlington Stores is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 27,800 in Burlington Stores on November 7, 2024 and sell it today you would earn a total of 400.00 from holding Burlington Stores or generate 1.44% 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. Burlington Stores
Performance |
| Timeline |
| HK Electric Investments |
| Burlington Stores |
HK Electric and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Burlington Stores
The main advantage of trading using opposite HK Electric and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| HK Electric vs. COSMOSTEEL HLDGS | HK Electric vs. Dentsply Sirona | HK Electric vs. TRADELINK ELECTRON | HK Electric vs. TRADEDOUBLER AB SK |
| Burlington Stores vs. Zurich Insurance Group | Burlington Stores vs. GREENX METALS LTD | Burlington Stores vs. DISTRICT METALS | Burlington Stores vs. Insurance Australia Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |