Correlation Between HK Electric and MeVis Medical
Can any of the company-specific risk be diversified away by investing in both HK Electric and MeVis Medical 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 MeVis Medical 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 MeVis Medical Solutions, you can compare the effects of market volatilities on HK Electric and MeVis Medical 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 MeVis Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and MeVis Medical.
Diversification Opportunities for HK Electric and MeVis Medical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and MeVis is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and MeVis Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeVis Medical Solutions 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 MeVis Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeVis Medical Solutions has no effect on the direction of HK Electric i.e., HK Electric and MeVis Medical go up and down completely randomly.
Pair Corralation between HK Electric and MeVis Medical
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 2.44 times more return on investment than MeVis Medical. However, HK Electric is 2.44 times more volatile than MeVis Medical Solutions. It trades about 0.09 of its potential returns per unit of risk. MeVis Medical Solutions is currently generating about -0.03 per unit of risk. If you would invest 22.00 in HK Electric Investments on November 27, 2024 and sell it today you would earn a total of 43.00 from holding HK Electric Investments or generate 195.45% 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. MeVis Medical Solutions
Performance |
| Timeline |
| HK Electric Investments |
| MeVis Medical Solutions |
HK Electric and MeVis Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and MeVis Medical
The main advantage of trading using opposite HK Electric and MeVis Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, MeVis Medical 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 MeVis Medical will offset losses from the drop in MeVis Medical's long position.| HK Electric vs. Transport International Holdings | HK Electric vs. COLUMBIA SPORTSWEAR | HK Electric vs. SOEDER SPORTFISKE AB | HK Electric vs. Firan Technology Group |
| MeVis Medical vs. Tencent Music Entertainment | MeVis Medical vs. Siamgas And Petrochemicals | MeVis Medical vs. Data Modul AG | MeVis Medical vs. Universal Entertainment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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