Correlation Between Hong Kong and NewJersey Resources
Can any of the company-specific risk be diversified away by investing in both Hong Kong and NewJersey Resources 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 NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong and and NewJersey Resources, you can compare the effects of market volatilities on Hong Kong and NewJersey Resources 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 NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and NewJersey Resources.
Diversification Opportunities for Hong Kong and NewJersey Resources
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hong and NewJersey is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong and and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources 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 and are associated (or correlated) with NewJersey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewJersey Resources has no effect on the direction of Hong Kong i.e., Hong Kong and NewJersey Resources go up and down completely randomly.
Pair Corralation between Hong Kong and NewJersey Resources
Assuming the 90 days horizon Hong Kong and is expected to generate 2.46 times more return on investment than NewJersey Resources. However, Hong Kong is 2.46 times more volatile than NewJersey Resources. It trades about 0.01 of its potential returns per unit of risk. NewJersey Resources is currently generating about 0.03 per unit of risk. If you would invest 73.00 in Hong Kong and on August 24, 2024 and sell it today you would lose (4.00) from holding Hong Kong and or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong and vs. NewJersey Resources
Performance |
| Timeline |
| Hong Kong |
| NewJersey Resources |
Hong Kong and NewJersey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and NewJersey Resources
The main advantage of trading using opposite Hong Kong and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, NewJersey Resources 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 NewJersey Resources will offset losses from the drop in NewJersey Resources' long position.| Hong Kong vs. NewJersey Resources | Hong Kong vs. Atmos Energy | Hong Kong vs. UGI Corporation | Hong Kong vs. Chesapeake Utilities |
| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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