Correlation Between HSBC Holdings and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC, you can compare the effects of market volatilities on HSBC Holdings and Ferrexpo PLC 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 Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Ferrexpo PLC.
Diversification Opportunities for HSBC Holdings and Ferrexpo PLC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and Ferrexpo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC 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 Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between HSBC Holdings and Ferrexpo PLC
Assuming the 90 days trading horizon HSBC Holdings PLC is expected to generate 0.15 times more return on investment than Ferrexpo PLC. However, HSBC Holdings PLC is 6.59 times less risky than Ferrexpo PLC. It trades about 0.29 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about 0.0 per unit of risk. If you would invest 79,120 in HSBC Holdings PLC on November 9, 2024 and sell it today you would earn a total of 5,680 from holding HSBC Holdings PLC or generate 7.18% 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. Ferrexpo PLC
Performance |
| Timeline |
| HSBC Holdings PLC |
| Ferrexpo PLC |
HSBC Holdings and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Ferrexpo PLC
The main advantage of trading using opposite HSBC Holdings and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| HSBC Holdings vs. Blackrock World Mining | HSBC Holdings vs. Atalaya Mining | HSBC Holdings vs. Bisichi Mining PLC | HSBC Holdings vs. Wyndham Hotels Resorts |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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