Correlation Between HSBC Holdings and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Credit Suisse 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 Credit Suisse 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 Credit Suisse Group, you can compare the effects of market volatilities on HSBC Holdings and Credit Suisse 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 Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Credit Suisse.
Diversification Opportunities for HSBC Holdings and Credit Suisse
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and Credit is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Credit Suisse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Group 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 Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Group has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Credit Suisse go up and down completely randomly.
Pair Corralation between HSBC Holdings and Credit Suisse
Given the investment horizon of 90 days HSBC Holdings PLC is expected to generate 0.24 times more return on investment than Credit Suisse. However, HSBC Holdings PLC is 4.19 times less risky than Credit Suisse. It trades about 0.09 of its potential returns per unit of risk. Credit Suisse Group is currently generating about -0.14 per unit of risk. If you would invest 2,650 in HSBC Holdings PLC on August 23, 2024 and sell it today you would earn a total of 1,973 from holding HSBC Holdings PLC or generate 74.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 26.81% |
| Values | Daily Returns |
HSBC Holdings PLC vs. Credit Suisse Group
Performance |
| Timeline |
| HSBC Holdings PLC |
| Credit Suisse Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HSBC Holdings and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Credit Suisse
The main advantage of trading using opposite HSBC Holdings and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Credit Suisse 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 Credit Suisse will offset losses from the drop in Credit Suisse's long position.| HSBC Holdings vs. ING Group NV | HSBC Holdings vs. Natwest Group PLC | HSBC Holdings vs. Banco Santander SA | HSBC Holdings vs. UBS Group AG |
| Credit Suisse vs. Barclays PLC ADR | Credit Suisse vs. HSBC Holdings PLC | Credit Suisse vs. ING Group NV | Credit Suisse vs. Citigroup |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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