Correlation Between HK Electric and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both HK Electric and Hemisphere Energy 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 Hemisphere Energy 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 Hemisphere Energy Corp, you can compare the effects of market volatilities on HK Electric and Hemisphere Energy 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 Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Hemisphere Energy.
Diversification Opportunities for HK Electric and Hemisphere Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HKT and Hemisphere is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of HK Electric i.e., HK Electric and Hemisphere Energy go up and down completely randomly.
Pair Corralation between HK Electric and Hemisphere Energy
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.73 times more return on investment than Hemisphere Energy. However, HK Electric is 1.73 times more volatile than Hemisphere Energy Corp. It trades about 0.09 of its potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.07 per unit of risk. If you would invest 18.00 in HK Electric Investments on September 19, 2024 and sell it today you would earn a total of 45.00 from holding HK Electric Investments or generate 250.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Hemisphere Energy Corp
Performance |
| Timeline |
| HK Electric Investments |
| Hemisphere Energy Corp |
HK Electric and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Hemisphere Energy
The main advantage of trading using opposite HK Electric and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Hemisphere Energy 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Hemisphere Energy vs. WisdomTree Investments | Hemisphere Energy vs. Food Life Companies | Hemisphere Energy vs. Astral Foods Limited | Hemisphere Energy vs. HK Electric Investments |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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