Correlation Between HSBC Holdings and Partner Communications
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Partner Communications 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 Partner Communications 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 Partner Communications, you can compare the effects of market volatilities on HSBC Holdings and Partner Communications 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 Partner Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Partner Communications.
Diversification Opportunities for HSBC Holdings and Partner Communications
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HSBC and Partner is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Partner Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partner Communications 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 Partner Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partner Communications has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Partner Communications go up and down completely randomly.
Pair Corralation between HSBC Holdings and Partner Communications
Given the investment horizon of 90 days HSBC Holdings is expected to generate 1.34 times less return on investment than Partner Communications. But when comparing it to its historical volatility, HSBC Holdings PLC is 2.79 times less risky than Partner Communications. It trades about 0.06 of its potential returns per unit of risk. Partner Communications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 462.00 in Partner Communications on September 12, 2024 and sell it today you would earn a total of 38.00 from holding Partner Communications or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 62.22% |
| Values | Daily Returns |
HSBC Holdings PLC vs. Partner Communications
Performance |
| Timeline |
| HSBC Holdings PLC |
| Partner Communications |
HSBC Holdings and Partner Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Partner Communications
The main advantage of trading using opposite HSBC Holdings and Partner Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Partner Communications 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 Partner Communications will offset losses from the drop in Partner Communications' long position.| HSBC Holdings vs. Bank of America | HSBC Holdings vs. Victory Integrity Smallmid Cap | HSBC Holdings vs. Hilton Worldwide Holdings | HSBC Holdings vs. NVIDIA |
| Partner Communications vs. MGIC Investment Corp | Partner Communications vs. Under Armour C | Partner Communications vs. Ralph Lauren Corp | Partner Communications vs. Nike Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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