Correlation Between HSBC SP and HSBC Asia
Can any of the company-specific risk be diversified away by investing in both HSBC SP and HSBC Asia 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 SP and HSBC Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC SP 500 and HSBC Asia Pacific, you can compare the effects of market volatilities on HSBC SP and HSBC Asia 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 SP with a short position of HSBC Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and HSBC Asia.
Diversification Opportunities for HSBC SP and HSBC Asia
Weak diversification
The 3 months correlation between HSBC and HSBC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and HSBC Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Asia Pacific and HSBC SP 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 SP 500 are associated (or correlated) with HSBC Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Asia Pacific has no effect on the direction of HSBC SP i.e., HSBC SP and HSBC Asia go up and down completely randomly.
Pair Corralation between HSBC SP and HSBC Asia
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 0.77 times more return on investment than HSBC Asia. However, HSBC SP 500 is 1.31 times less risky than HSBC Asia. It trades about 0.35 of its potential returns per unit of risk. HSBC Asia Pacific is currently generating about -0.08 per unit of risk. If you would invest 448,665 in HSBC SP 500 on September 2, 2024 and sell it today you would earn a total of 31,735 from holding HSBC SP 500 or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. HSBC Asia Pacific
Performance |
| Timeline |
| HSBC SP 500 |
| HSBC Asia Pacific |
HSBC SP and HSBC Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and HSBC Asia
The main advantage of trading using opposite HSBC SP and HSBC Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, HSBC Asia 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 Asia will offset losses from the drop in HSBC Asia's long position.| HSBC SP vs. GraniteShares 3x Short | HSBC SP vs. WisdomTree Natural Gas | HSBC SP vs. Leverage Shares 3x | HSBC SP vs. WisdomTree Natural Gas |
| HSBC Asia vs. HSBC FTSE EPRA | HSBC Asia vs. HSBC SP 500 | HSBC Asia vs. HSBC MSCI Emerging | HSBC Asia vs. HSBC NASDAQ Global |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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