Correlation Between HK Electric and ÜSTRA Hannoversche
Can any of the company-specific risk be diversified away by investing in both HK Electric and ÜSTRA Hannoversche 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 ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe, you can compare the effects of market volatilities on HK Electric and ÜSTRA Hannoversche 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 ÜSTRA Hannoversche. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and ÜSTRA Hannoversche.
Diversification Opportunities for HK Electric and ÜSTRA Hannoversche
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HKT and ÜSTRA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ÜSTRA Hannoversche 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 ÜSTRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ÜSTRA Hannoversche has no effect on the direction of HK Electric i.e., HK Electric and ÜSTRA Hannoversche go up and down completely randomly.
Pair Corralation between HK Electric and ÜSTRA Hannoversche
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.68 times more return on investment than ÜSTRA Hannoversche. However, HK Electric Investments is 1.47 times less risky than ÜSTRA Hannoversche. It trades about 0.12 of its potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about -0.02 per unit of risk. If you would invest 42.00 in HK Electric Investments on September 3, 2024 and sell it today you would earn a total of 21.00 from holding HK Electric Investments or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. STRA Hannoversche Verkehrsbetr
Performance |
| Timeline |
| HK Electric Investments |
| ÜSTRA Hannoversche |
HK Electric and ÜSTRA Hannoversche Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and ÜSTRA Hannoversche
The main advantage of trading using opposite HK Electric and ÜSTRA Hannoversche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, ÜSTRA Hannoversche 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 ÜSTRA Hannoversche will offset losses from the drop in ÜSTRA Hannoversche's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| ÜSTRA Hannoversche vs. FUTURE GAMING GRP | ÜSTRA Hannoversche vs. 24SEVENOFFICE GROUP AB | ÜSTRA Hannoversche vs. Games Workshop Group | ÜSTRA Hannoversche vs. MTI WIRELESS EDGE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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