Correlation Between Hong Kong and SP Global
Can any of the company-specific risk be diversified away by investing in both Hong Kong and SP Global 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 SP Global 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 SP Global, you can compare the effects of market volatilities on Hong Kong and SP Global 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 SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and SP Global.
Diversification Opportunities for Hong Kong and SP Global
Very good diversification
The 3 months correlation between Hong and SPGI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchanges and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global 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 SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of Hong Kong i.e., Hong Kong and SP Global go up and down completely randomly.
Pair Corralation between Hong Kong and SP Global
Assuming the 90 days horizon Hong Kong Exchanges is expected to generate 5.43 times more return on investment than SP Global. However, Hong Kong is 5.43 times more volatile than SP Global. It trades about 0.1 of its potential returns per unit of risk. SP Global is currently generating about 0.04 per unit of risk. If you would invest 2,970 in Hong Kong Exchanges on August 30, 2024 and sell it today you would earn a total of 824.00 from holding Hong Kong Exchanges or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong Exchanges vs. SP Global
Performance |
| Timeline |
| Hong Kong Exchanges |
| SP Global |
Hong Kong and SP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and SP Global
The main advantage of trading using opposite Hong Kong and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's 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 |
| SP Global vs. MSCI Inc | SP Global vs. Nasdaq Inc | SP Global vs. Intercontinental Exchange | SP Global vs. CME Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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