Correlation Between Molina Healthcare and HK Electric
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and HK Electric 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 Molina Healthcare and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and HK Electric Investments, you can compare the effects of market volatilities on Molina Healthcare and HK Electric 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 Molina Healthcare with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and HK Electric.
Diversification Opportunities for Molina Healthcare and HK Electric
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Molina and HKT is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments and Molina Healthcare 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 Molina Healthcare are associated (or correlated) with HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and HK Electric go up and down completely randomly.
Pair Corralation between Molina Healthcare and HK Electric
Assuming the 90 days trading horizon Molina Healthcare is expected to generate 5.07 times more return on investment than HK Electric. However, Molina Healthcare is 5.07 times more volatile than HK Electric Investments. It trades about 0.13 of its potential returns per unit of risk. HK Electric Investments is currently generating about -0.22 per unit of risk. If you would invest 27,880 in Molina Healthcare on October 28, 2024 and sell it today you would earn a total of 1,170 from holding Molina Healthcare or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. HK Electric Investments
Performance |
| Timeline |
| Molina Healthcare |
| HK Electric Investments |
Molina Healthcare and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and HK Electric
The main advantage of trading using opposite Molina Healthcare and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc |
| HK Electric vs. Vishay Intertechnology | HK Electric vs. STRAYER EDUCATION | HK Electric vs. Xinhua Winshare Publishing | HK Electric vs. UPDATE SOFTWARE |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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