Correlation Between Monks Investment and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Monks Investment 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 Monks Investment and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monks Investment Trust and HSBC Holdings PLC, you can compare the effects of market volatilities on Monks Investment 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 Monks Investment with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and HSBC Holdings.
Diversification Opportunities for Monks Investment and HSBC Holdings
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Monks and HSBC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust 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 Monks Investment 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 Monks Investment Trust 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 Monks Investment i.e., Monks Investment and HSBC Holdings go up and down completely randomly.
Pair Corralation between Monks Investment and HSBC Holdings
Assuming the 90 days trading horizon Monks Investment is expected to generate 1.91 times less return on investment than HSBC Holdings. But when comparing it to its historical volatility, Monks Investment Trust is 1.27 times less risky than HSBC Holdings. It trades about 0.06 of its potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 44,784 in HSBC Holdings PLC on September 23, 2024 and sell it today you would earn a total of 31,296 from holding HSBC Holdings PLC or generate 69.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Monks Investment Trust vs. HSBC Holdings PLC
Performance |
| Timeline |
| Monks Investment Trust |
| HSBC Holdings PLC |
Monks Investment and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and HSBC Holdings
The main advantage of trading using opposite Monks Investment and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment 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.| Monks Investment vs. Samsung Electronics Co | Monks Investment vs. Samsung Electronics Co | Monks Investment vs. Hyundai Motor | Monks Investment vs. Toyota Motor Corp |
| HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Hyundai Motor | HSBC Holdings vs. Toyota Motor Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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