Correlation Between HK Electric and Clean Energy
Can any of the company-specific risk be diversified away by investing in both HK Electric and Clean Energy 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 Clean Energy 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 Clean Energy Fuels, you can compare the effects of market volatilities on HK Electric and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Clean Energy.
Diversification Opportunities for HK Electric and Clean Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between HKT and Clean is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of HK Electric i.e., HK Electric and Clean Energy go up and down completely randomly.
Pair Corralation between HK Electric and Clean Energy
Assuming the 90 days trading horizon HK Electric is expected to generate 9.61 times less return on investment than Clean Energy. But when comparing it to its historical volatility, HK Electric Investments is 6.74 times less risky than Clean Energy. It trades about 0.1 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Clean Energy Fuels on August 31, 2024 and sell it today you would earn a total of 37.00 from holding Clean Energy Fuels or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Clean Energy Fuels
Performance |
| Timeline |
| HK Electric Investments |
| Clean Energy Fuels |
HK Electric and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Clean Energy
The main advantage of trading using opposite HK Electric and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Clean Energy vs. STORE ELECTRONIC | Clean Energy vs. Astral Foods Limited | Clean Energy vs. AUSNUTRIA DAIRY | Clean Energy vs. JJ SNACK 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |