Correlation Between HK Electric and Quarterhill
Can any of the company-specific risk be diversified away by investing in both HK Electric and Quarterhill 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 Quarterhill 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 Quarterhill, you can compare the effects of market volatilities on HK Electric and Quarterhill 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 Quarterhill. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Quarterhill.
Diversification Opportunities for HK Electric and Quarterhill
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HKT and Quarterhill is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Quarterhill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quarterhill 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 Quarterhill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quarterhill has no effect on the direction of HK Electric i.e., HK Electric and Quarterhill go up and down completely randomly.
Pair Corralation between HK Electric and Quarterhill
Assuming the 90 days trading horizon HK Electric is expected to generate 3.65 times less return on investment than Quarterhill. But when comparing it to its historical volatility, HK Electric Investments is 1.73 times less risky than Quarterhill. It trades about 0.08 of its potential returns per unit of risk. Quarterhill is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 102.00 in Quarterhill on November 29, 2024 and sell it today you would earn a total of 6.00 from holding Quarterhill or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Quarterhill
Performance |
| Timeline |
| HK Electric Investments |
| Quarterhill |
HK Electric and Quarterhill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Quarterhill
The main advantage of trading using opposite HK Electric and Quarterhill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Quarterhill 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 Quarterhill will offset losses from the drop in Quarterhill's long position.| HK Electric vs. Cass Information Systems | HK Electric vs. ANGLO ASIAN MINING | HK Electric vs. Eurasia Mining Plc | HK Electric vs. Alibaba Health Information |
| Quarterhill vs. Apple Inc | Quarterhill vs. Apple Inc | Quarterhill vs. Apple Inc | Quarterhill vs. Apple Inc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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