Correlation Between HSBC Holdings and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Tetragon Financial 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 Tetragon Financial 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 Tetragon Financial Group, you can compare the effects of market volatilities on HSBC Holdings and Tetragon Financial 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 Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Tetragon Financial.
Diversification Opportunities for HSBC Holdings and Tetragon Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and Tetragon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial 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 Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Tetragon Financial go up and down completely randomly.
Pair Corralation between HSBC Holdings and Tetragon Financial
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 1.89 times less return on investment than Tetragon Financial. But when comparing it to its historical volatility, HSBC Holdings PLC is 1.7 times less risky than Tetragon Financial. It trades about 0.31 of its potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,135 in Tetragon Financial Group on October 14, 2024 and sell it today you would earn a total of 460.00 from holding Tetragon Financial Group or generate 40.53% 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. Tetragon Financial Group
Performance |
| Timeline |
| HSBC Holdings PLC |
| Tetragon Financial |
HSBC Holdings and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Tetragon Financial
The main advantage of trading using opposite HSBC Holdings and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| HSBC Holdings vs. Tetragon Financial Group | HSBC Holdings vs. FinecoBank SpA | HSBC Holdings vs. Erste Group Bank | HSBC Holdings vs. Synchrony Financial |
| Tetragon Financial vs. SupplyMe Capital PLC | Tetragon Financial vs. SM Energy Co | Tetragon Financial vs. FuelCell Energy | Tetragon Financial vs. Grand Vision Media |
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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