Correlation Between HK Electric and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both HK Electric and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on HK Electric and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and COLUMBIA SPORTSWEAR.
Diversification Opportunities for HK Electric and COLUMBIA SPORTSWEAR
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HKT and COLUMBIA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of HK Electric i.e., HK Electric and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between HK Electric and COLUMBIA SPORTSWEAR
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the COLUMBIA SPORTSWEAR. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 3.5 times less risky than COLUMBIA SPORTSWEAR. The stock trades about -0.22 of its potential returns per unit of risk. The COLUMBIA SPORTSWEAR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8,050 in COLUMBIA SPORTSWEAR on November 7, 2024 and sell it today you would earn a total of 250.00 from holding COLUMBIA SPORTSWEAR or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
HK Electric Investments vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| HK Electric Investments |
| COLUMBIA SPORTSWEAR |
HK Electric and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite HK Electric and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| HK Electric vs. COSMOSTEEL HLDGS | HK Electric vs. Dentsply Sirona | HK Electric vs. TRADELINK ELECTRON | HK Electric vs. TRADEDOUBLER AB SK |
| COLUMBIA SPORTSWEAR vs. Uber Technologies | COLUMBIA SPORTSWEAR vs. Agilent Technologies | COLUMBIA SPORTSWEAR vs. Sunny Optical Technology | COLUMBIA SPORTSWEAR vs. Acadia Healthcare |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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