Correlation Between HK Electric and Sanmina
Can any of the company-specific risk be diversified away by investing in both HK Electric and Sanmina 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 Sanmina 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 Sanmina, you can compare the effects of market volatilities on HK Electric and Sanmina 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 Sanmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Sanmina.
Diversification Opportunities for HK Electric and Sanmina
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HKT and Sanmina is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina 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 Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of HK Electric i.e., HK Electric and Sanmina go up and down completely randomly.
Pair Corralation between HK Electric and Sanmina
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.31 times more return on investment than Sanmina. However, HK Electric is 1.31 times more volatile than Sanmina. It trades about 0.1 of its potential returns per unit of risk. Sanmina is currently generating about 0.04 per unit of risk. If you would invest 17.00 in HK Electric Investments on December 4, 2024 and sell it today you would earn a total of 49.00 from holding HK Electric Investments or generate 288.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
HK Electric Investments vs. Sanmina
Performance |
| Timeline |
| HK Electric Investments |
| Sanmina |
HK Electric and Sanmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Sanmina
The main advantage of trading using opposite HK Electric and Sanmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Sanmina 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 Sanmina will offset losses from the drop in Sanmina's long position.| HK Electric vs. COFCO Joycome Foods | HK Electric vs. Cal Maine Foods | HK Electric vs. 24SEVENOFFICE GROUP AB | HK Electric vs. CITY OFFICE REIT |
| Sanmina vs. Federal Agricultural Mortgage | Sanmina vs. Cairo Communication SpA | Sanmina vs. Chengdu PUTIAN Telecommunications | Sanmina vs. GEELY AUTOMOBILE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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