Correlation Between HSBC Holdings and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and AcadeMedia 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 HSBC Holdings and AcadeMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings PLC and AcadeMedia AB, you can compare the effects of market volatilities on HSBC Holdings and AcadeMedia 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 HSBC Holdings with a short position of AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and AcadeMedia.
Diversification Opportunities for HSBC Holdings and AcadeMedia
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and AcadeMedia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB and HSBC Holdings 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 HSBC Holdings PLC are associated (or correlated) with AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and AcadeMedia go up and down completely randomly.
Pair Corralation between HSBC Holdings and AcadeMedia
Assuming the 90 days trading horizon HSBC Holdings PLC is expected to generate 0.59 times more return on investment than AcadeMedia. However, HSBC Holdings PLC is 1.69 times less risky than AcadeMedia. It trades about 0.32 of its potential returns per unit of risk. AcadeMedia AB is currently generating about 0.15 per unit of risk. If you would invest 76,110 in HSBC Holdings PLC on October 13, 2024 and sell it today you would earn a total of 3,800 from holding HSBC Holdings PLC or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings PLC vs. AcadeMedia AB
Performance |
| Timeline |
| HSBC Holdings PLC |
| AcadeMedia AB |
HSBC Holdings and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and AcadeMedia
The main advantage of trading using opposite HSBC Holdings and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia's long position.| HSBC Holdings vs. AcadeMedia AB | HSBC Holdings vs. XLMedia PLC | HSBC Holdings vs. St Galler Kantonalbank | HSBC Holdings vs. LBG Media PLC |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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