Correlation Between HK Electric and Arrowhead Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both HK Electric and Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals, you can compare the effects of market volatilities on HK Electric and Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Arrowhead Pharmaceuticals.
Diversification Opportunities for HK Electric and Arrowhead Pharmaceuticals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between HKT and Arrowhead is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Arrowhead Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowhead Pharmaceuticals has no effect on the direction of HK Electric i.e., HK Electric and Arrowhead Pharmaceuticals go up and down completely randomly.
Pair Corralation between HK Electric and Arrowhead Pharmaceuticals
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.81 times more return on investment than Arrowhead Pharmaceuticals. However, HK Electric Investments is 1.24 times less risky than Arrowhead Pharmaceuticals. It trades about 0.09 of its potential returns per unit of risk. Arrowhead Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest 18.00 in HK Electric Investments on October 28, 2024 and sell it today you would earn a total of 46.00 from holding HK Electric Investments or generate 255.56% 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. Arrowhead Pharmaceuticals
Performance |
| Timeline |
| HK Electric Investments |
| Arrowhead Pharmaceuticals |
HK Electric and Arrowhead Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Arrowhead Pharmaceuticals
The main advantage of trading using opposite HK Electric and Arrowhead Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals will offset losses from the drop in Arrowhead Pharmaceuticals' long position.| HK Electric vs. Vishay Intertechnology | HK Electric vs. STRAYER EDUCATION | HK Electric vs. Xinhua Winshare Publishing | HK Electric vs. UPDATE SOFTWARE |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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