Correlation Between HK Electric and Hapag Lloyd
Can any of the company-specific risk be diversified away by investing in both HK Electric and Hapag Lloyd 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 Hapag Lloyd 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 Hapag Lloyd AG, you can compare the effects of market volatilities on HK Electric and Hapag Lloyd 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 Hapag Lloyd. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Hapag Lloyd.
Diversification Opportunities for HK Electric and Hapag Lloyd
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Hapag is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Hapag Lloyd AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd AG 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 Hapag Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd AG has no effect on the direction of HK Electric i.e., HK Electric and Hapag Lloyd go up and down completely randomly.
Pair Corralation between HK Electric and Hapag Lloyd
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.25 times more return on investment than Hapag Lloyd. However, HK Electric Investments is 4.03 times less risky than Hapag Lloyd. It trades about 0.0 of its potential returns per unit of risk. Hapag Lloyd AG is currently generating about -0.09 per unit of risk. If you would invest 63.00 in HK Electric Investments on August 30, 2024 and sell it today you would earn a total of 0.00 from holding HK Electric Investments or generate 0.0% 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. Hapag Lloyd AG
Performance |
| Timeline |
| HK Electric Investments |
| Hapag Lloyd AG |
HK Electric and Hapag Lloyd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Hapag Lloyd
The main advantage of trading using opposite HK Electric and Hapag Lloyd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Hapag Lloyd 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 Hapag Lloyd will offset losses from the drop in Hapag Lloyd's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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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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