Correlation Between Hongkong and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Hongkong and HSBC Holdings 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 Hongkong and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hongkong and and HSBC Holdings plc, you can compare the effects of market volatilities on Hongkong and HSBC Holdings 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 Hongkong with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongkong and HSBC Holdings.
Diversification Opportunities for Hongkong and HSBC Holdings
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hongkong and HSBC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Hongkong and and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc and Hongkong 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 The Hongkong and are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Hongkong i.e., Hongkong and HSBC Holdings go up and down completely randomly.
Pair Corralation between Hongkong and HSBC Holdings
Assuming the 90 days horizon The Hongkong and is expected to generate 1.47 times more return on investment than HSBC Holdings. However, Hongkong is 1.47 times more volatile than HSBC Holdings plc. It trades about 0.14 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.18 per unit of risk. If you would invest 72.00 in The Hongkong and on October 10, 2024 and sell it today you would earn a total of 3.00 from holding The Hongkong and or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
The Hongkong and vs. HSBC Holdings plc
Performance |
| Timeline |
| The Hongkong |
| HSBC Holdings plc |
Hongkong and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongkong and HSBC Holdings
The main advantage of trading using opposite Hongkong and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongkong position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Hongkong vs. Host Hotels Resorts | Hongkong vs. QUEEN S ROAD | Hongkong vs. DALATA HOTEL | Hongkong vs. Park Hotels Resorts |
| HSBC Holdings vs. The Hongkong and | HSBC Holdings vs. Benchmark Electronics | HSBC Holdings vs. DALATA HOTEL | HSBC Holdings vs. Renesas Electronics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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