Correlation Between HK Electric and Nishi-Nippon Railroad
Can any of the company-specific risk be diversified away by investing in both HK Electric and Nishi-Nippon Railroad 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 Nishi-Nippon Railroad 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 Nishi Nippon Railroad Co, you can compare the effects of market volatilities on HK Electric and Nishi-Nippon Railroad 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 Nishi-Nippon Railroad. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Nishi-Nippon Railroad.
Diversification Opportunities for HK Electric and Nishi-Nippon Railroad
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between HKT and Nishi-Nippon is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Nishi Nippon Railroad Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nishi Nippon Railroad 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 Nishi-Nippon Railroad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nishi Nippon Railroad has no effect on the direction of HK Electric i.e., HK Electric and Nishi-Nippon Railroad go up and down completely randomly.
Pair Corralation between HK Electric and Nishi-Nippon Railroad
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the Nishi-Nippon Railroad. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 4.63 times less risky than Nishi-Nippon Railroad. The stock trades about -0.22 of its potential returns per unit of risk. The Nishi Nippon Railroad Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,370 in Nishi Nippon Railroad Co on November 7, 2024 and sell it today you would earn a total of 10.00 from holding Nishi Nippon Railroad Co or generate 0.73% 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. Nishi Nippon Railroad Co
Performance |
| Timeline |
| HK Electric Investments |
| Nishi Nippon Railroad |
HK Electric and Nishi-Nippon Railroad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Nishi-Nippon Railroad
The main advantage of trading using opposite HK Electric and Nishi-Nippon Railroad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Nishi-Nippon Railroad 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 Nishi-Nippon Railroad will offset losses from the drop in Nishi-Nippon Railroad's long position.| HK Electric vs. COSMOSTEEL HLDGS | HK Electric vs. Dentsply Sirona | HK Electric vs. TRADELINK ELECTRON | HK Electric vs. TRADEDOUBLER AB SK |
| Nishi-Nippon Railroad vs. Siemens Healthineers AG | Nishi-Nippon Railroad vs. Brockhaus Capital Management | Nishi-Nippon Railroad vs. Air Lease | Nishi-Nippon Railroad vs. LOANDEPOT INC A |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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