Correlation Between Hong Kong and Bayport International
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Bayport International 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 Bayport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Land and Bayport International Holdings, you can compare the effects of market volatilities on Hong Kong and Bayport International 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 Bayport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Bayport International.
Diversification Opportunities for Hong Kong and Bayport International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hong and Bayport is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and Bayport International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayport International 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 Land are associated (or correlated) with Bayport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayport International has no effect on the direction of Hong Kong i.e., Hong Kong and Bayport International go up and down completely randomly.
Pair Corralation between Hong Kong and Bayport International
Assuming the 90 days horizon Hong Kong is expected to generate 221.68 times less return on investment than Bayport International. But when comparing it to its historical volatility, Hong Kong Land is 38.42 times less risky than Bayport International. It trades about 0.01 of its potential returns per unit of risk. Bayport International Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Bayport International Holdings on November 2, 2024 and sell it today you would lose (0.79) from holding Bayport International Holdings or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong Land vs. Bayport International Holdings
Performance |
| Timeline |
| Hong Kong Land |
| Bayport International |
Hong Kong and Bayport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Bayport International
The main advantage of trading using opposite Hong Kong and Bayport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Bayport International 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 Bayport International will offset losses from the drop in Bayport International's long position.| Hong Kong vs. Wharf Holdings | Hong Kong vs. Holiday Island Holdings | Hong Kong vs. Sun Hung Kai | Hong Kong vs. Bayport International Holdings |
| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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