Correlation Between Hong Kong and Northwest Natural
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Northwest Natural 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 Northwest Natural 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 Northwest Natural Gas, you can compare the effects of market volatilities on Hong Kong and Northwest Natural 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 Northwest Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Northwest Natural.
Diversification Opportunities for Hong Kong and Northwest Natural
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hong and Northwest is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong and and Northwest Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Natural Gas 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 Northwest Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Natural Gas has no effect on the direction of Hong Kong i.e., Hong Kong and Northwest Natural go up and down completely randomly.
Pair Corralation between Hong Kong and Northwest Natural
Assuming the 90 days horizon Hong Kong and is expected to generate 2.38 times more return on investment than Northwest Natural. However, Hong Kong is 2.38 times more volatile than Northwest Natural Gas. It trades about 0.01 of its potential returns per unit of risk. Northwest Natural Gas is currently generating about -0.01 per unit of risk. If you would invest 84.00 in Hong Kong and on November 2, 2024 and sell it today you would lose (11.00) from holding Hong Kong and or give up 13.1% 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. Northwest Natural Gas
Performance |
| Timeline |
| Hong Kong |
| Northwest Natural Gas |
Hong Kong and Northwest Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Northwest Natural
The main advantage of trading using opposite Hong Kong and Northwest Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Northwest Natural 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 Northwest Natural will offset losses from the drop in Northwest Natural's long position.| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
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 CEOs Directory module to screen CEOs from public companies around the world.
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