Correlation Between HK Electric and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both HK Electric and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on HK Electric and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Fevertree Drinks.
Diversification Opportunities for HK Electric and Fevertree Drinks
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HKT and Fevertree is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of HK Electric i.e., HK Electric and Fevertree Drinks go up and down completely randomly.
Pair Corralation between HK Electric and Fevertree Drinks
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.07 times more return on investment than Fevertree Drinks. However, HK Electric is 1.07 times more volatile than Fevertree Drinks PLC. It trades about 0.09 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.04 per unit of risk. If you would invest 29.00 in HK Electric Investments on December 13, 2024 and sell it today you would earn a total of 35.00 from holding HK Electric Investments or generate 120.69% 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. Fevertree Drinks PLC
Performance |
| Timeline |
| HK Electric Investments |
| Fevertree Drinks PLC |
HK Electric and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Fevertree Drinks
The main advantage of trading using opposite HK Electric and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| HK Electric vs. TELECOM ITALIA | ||
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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