Correlation Between Hong Kong and Moodys
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Moodys 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 Hong Kong and Moodys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Exchanges and Moodys, you can compare the effects of market volatilities on Hong Kong and Moodys 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 Hong Kong with a short position of Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Moodys.
Diversification Opportunities for Hong Kong and Moodys
Excellent diversification
The 3 months correlation between Hong and Moodys is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchanges and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys and Hong Kong 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 Hong Kong Exchanges are associated (or correlated) with Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Hong Kong i.e., Hong Kong and Moodys go up and down completely randomly.
Pair Corralation between Hong Kong and Moodys
Assuming the 90 days horizon Hong Kong is expected to generate 1.97 times less return on investment than Moodys. In addition to that, Hong Kong is 2.65 times more volatile than Moodys. It trades about 0.02 of its total potential returns per unit of risk. Moodys is currently generating about 0.09 per unit of volatility. If you would invest 28,753 in Moodys on August 27, 2024 and sell it today you would earn a total of 19,313 from holding Moodys or generate 67.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.94% |
| Values | Daily Returns |
Hong Kong Exchanges vs. Moodys
Performance |
| Timeline |
| Hong Kong Exchanges |
| Moodys |
Hong Kong and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Moodys
The main advantage of trading using opposite Hong Kong and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' long position.| Hong Kong vs. Singapore Exchange Limited | Hong Kong vs. London Stock Exchange | Hong Kong vs. MSCI Inc | Hong Kong vs. London Stock Exchange |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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