Correlation Between HK Electric and Whirlpool
Can any of the company-specific risk be diversified away by investing in both HK Electric and Whirlpool 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 Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on HK Electric and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Whirlpool.
Diversification Opportunities for HK Electric and Whirlpool
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HKT and Whirlpool is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of HK Electric i.e., HK Electric and Whirlpool go up and down completely randomly.
Pair Corralation between HK Electric and Whirlpool
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.08 times more return on investment than Whirlpool. However, HK Electric Investments is 13.06 times less risky than Whirlpool. It trades about -0.22 of its potential returns per unit of risk. Whirlpool is currently generating about -0.03 per unit of risk. If you would invest 65.00 in HK Electric Investments on November 2, 2024 and sell it today you would lose (1.00) from holding HK Electric Investments or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Whirlpool
Performance |
| Timeline |
| HK Electric Investments |
| Whirlpool |
HK Electric and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Whirlpool
The main advantage of trading using opposite HK Electric and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.| HK Electric vs. Titan Machinery | HK Electric vs. Q2M Managementberatung AG | HK Electric vs. Cleanaway Waste Management | HK Electric vs. Hanison Construction Holdings |
| Whirlpool vs. China Resources Beer | Whirlpool vs. MOLSON RS BEVERAGE | Whirlpool vs. Tsingtao Brewery | Whirlpool vs. THAI BEVERAGE |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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