Correlation Between HK Electric and STHREE PLC
Can any of the company-specific risk be diversified away by investing in both HK Electric and STHREE PLC 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 STHREE PLC 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 STHREE PLC LS, you can compare the effects of market volatilities on HK Electric and STHREE PLC 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 STHREE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and STHREE PLC.
Diversification Opportunities for HK Electric and STHREE PLC
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HKT and STHREE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and STHREE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STHREE PLC LS 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 STHREE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STHREE PLC LS has no effect on the direction of HK Electric i.e., HK Electric and STHREE PLC go up and down completely randomly.
Pair Corralation between HK Electric and STHREE PLC
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.58 times more return on investment than STHREE PLC. However, HK Electric is 1.58 times more volatile than STHREE PLC LS. It trades about 0.09 of its potential returns per unit of risk. STHREE PLC LS is currently generating about -0.02 per unit of risk. If you would invest 17.00 in HK Electric Investments on September 15, 2024 and sell it today you would earn a total of 47.00 from holding HK Electric Investments or generate 276.47% 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. STHREE PLC LS
Performance |
| Timeline |
| HK Electric Investments |
| STHREE PLC LS |
HK Electric and STHREE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and STHREE PLC
The main advantage of trading using opposite HK Electric and STHREE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, STHREE PLC 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 STHREE PLC will offset losses from the drop in STHREE PLC's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| STHREE PLC vs. HK Electric Investments | STHREE PLC vs. Postal Savings Bank | STHREE PLC vs. Thai Beverage Public | STHREE PLC vs. COFCO Joycome Foods |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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