Correlation Between HK Electric and TAG Immobilien
Can any of the company-specific risk be diversified away by investing in both HK Electric and TAG Immobilien 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 TAG Immobilien 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 TAG Immobilien AG, you can compare the effects of market volatilities on HK Electric and TAG Immobilien 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 TAG Immobilien. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and TAG Immobilien.
Diversification Opportunities for HK Electric and TAG Immobilien
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HKT and TAG is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and TAG Immobilien AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAG Immobilien AG 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 TAG Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAG Immobilien AG has no effect on the direction of HK Electric i.e., HK Electric and TAG Immobilien go up and down completely randomly.
Pair Corralation between HK Electric and TAG Immobilien
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.63 times more return on investment than TAG Immobilien. However, HK Electric is 1.63 times more volatile than TAG Immobilien AG. It trades about 0.12 of its potential returns per unit of risk. TAG Immobilien AG is currently generating about 0.03 per unit of risk. If you would invest 42.00 in HK Electric Investments on September 3, 2024 and sell it today you would earn a total of 21.00 from holding HK Electric Investments or generate 50.0% 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. TAG Immobilien AG
Performance |
| Timeline |
| HK Electric Investments |
| TAG Immobilien AG |
HK Electric and TAG Immobilien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and TAG Immobilien
The main advantage of trading using opposite HK Electric and TAG Immobilien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, TAG Immobilien 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 TAG Immobilien will offset losses from the drop in TAG Immobilien's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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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 Stocks Directory module to find actively traded stocks across global markets.
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