Correlation Between Hudson Pacific and East Africa
Can any of the company-specific risk be diversified away by investing in both Hudson Pacific and East Africa 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 Hudson Pacific and East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Pacific Properties and East Africa Metals, you can compare the effects of market volatilities on Hudson Pacific and East Africa 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 Hudson Pacific with a short position of East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and East Africa.
Diversification Opportunities for Hudson Pacific and East Africa
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hudson and East is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals and Hudson Pacific 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 Hudson Pacific Properties are associated (or correlated) with East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and East Africa go up and down completely randomly.
Pair Corralation between Hudson Pacific and East Africa
Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the East Africa. But the stock apears to be less risky and, when comparing its historical volatility, Hudson Pacific Properties is 5.8 times less risky than East Africa. The stock trades about -0.05 of its potential returns per unit of risk. The East Africa Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.41 in East Africa Metals on September 3, 2024 and sell it today you would earn a total of 9.59 from holding East Africa Metals or generate 680.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hudson Pacific Properties vs. East Africa Metals
Performance |
| Timeline |
| Hudson Pacific Properties |
| East Africa Metals |
Hudson Pacific and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Pacific and East Africa
The main advantage of trading using opposite Hudson Pacific and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.| Hudson Pacific vs. Kilroy Realty Corp | Hudson Pacific vs. Highwoods Properties | Hudson Pacific vs. Cousins Properties Incorporated | Hudson Pacific vs. City Office |
| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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