Correlation Between HK Electric and Dollarama
Can any of the company-specific risk be diversified away by investing in both HK Electric and Dollarama 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 Dollarama 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 Dollarama, you can compare the effects of market volatilities on HK Electric and Dollarama 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 Dollarama. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Dollarama.
Diversification Opportunities for HK Electric and Dollarama
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HKT and Dollarama is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Dollarama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollarama 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 Dollarama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollarama has no effect on the direction of HK Electric i.e., HK Electric and Dollarama go up and down completely randomly.
Pair Corralation between HK Electric and Dollarama
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 2.46 times more return on investment than Dollarama. However, HK Electric is 2.46 times more volatile than Dollarama. It trades about 0.09 of its potential returns per unit of risk. Dollarama is currently generating about 0.09 per unit of risk. If you would invest 17.00 in HK Electric Investments on September 14, 2024 and sell it today you would earn a total of 47.00 from holding HK Electric Investments or generate 276.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Dollarama
Performance |
| Timeline |
| HK Electric Investments |
| Dollarama |
HK Electric and Dollarama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Dollarama
The main advantage of trading using opposite HK Electric and Dollarama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Dollarama 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 Dollarama will offset losses from the drop in Dollarama's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Dollarama vs. T MOBILE US | Dollarama vs. MTI WIRELESS EDGE | Dollarama vs. Canon Marketing Japan | Dollarama vs. MARKET VECTR RETAIL |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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