Correlation Between 3I Group and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both 3I Group 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 3I Group and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3I Group PLC and HSBC Holdings PLC, you can compare the effects of market volatilities on 3I Group 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 3I Group with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3I Group and HSBC Holdings.
Diversification Opportunities for 3I Group and HSBC Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between III and HSBC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding 3I Group PLC 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 3I Group 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 3I Group PLC 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 3I Group i.e., 3I Group and HSBC Holdings go up and down completely randomly.
Pair Corralation between 3I Group and HSBC Holdings
Assuming the 90 days trading horizon 3I Group PLC is expected to generate 1.11 times more return on investment than HSBC Holdings. However, 3I Group is 1.11 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 0.09 per unit of risk. If you would invest 132,837 in 3I Group PLC on September 23, 2024 and sell it today you would earn a total of 221,963 from holding 3I Group PLC or generate 167.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
3I Group PLC vs. HSBC Holdings PLC
Performance |
| Timeline |
| 3I Group PLC |
| HSBC Holdings PLC |
3I Group and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3I Group and HSBC Holdings
The main advantage of trading using opposite 3I Group and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3I Group 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.| 3I Group vs. McEwen Mining | 3I Group vs. Panther Metals PLC | 3I Group vs. Molson Coors Beverage | 3I Group vs. Jacquet Metal Service |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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