Correlation Between Renesas Electronics and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Renesas Electronics 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 Renesas Electronics and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renesas Electronics and HSBC Holdings plc, you can compare the effects of market volatilities on Renesas Electronics 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 Renesas Electronics with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renesas Electronics and HSBC Holdings.
Diversification Opportunities for Renesas Electronics and HSBC Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Renesas and HSBC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics i.e., Renesas Electronics and HSBC Holdings go up and down completely randomly.
Pair Corralation between Renesas Electronics and HSBC Holdings
Assuming the 90 days horizon Renesas Electronics is expected to generate 1.71 times less return on investment than HSBC Holdings. In addition to that, Renesas Electronics is 1.7 times more volatile than HSBC Holdings plc. It trades about 0.06 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.18 per unit of volatility. If you would invest 911.00 in HSBC Holdings plc on October 10, 2024 and sell it today you would earn a total of 32.00 from holding HSBC Holdings plc or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renesas Electronics vs. HSBC Holdings plc
Performance |
| Timeline |
| Renesas Electronics |
| HSBC Holdings plc |
Renesas Electronics and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renesas Electronics and HSBC Holdings
The main advantage of trading using opposite Renesas Electronics and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renesas Electronics 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.| Renesas Electronics vs. Grand Canyon Education | Renesas Electronics vs. DEVRY EDUCATION GRP | Renesas Electronics vs. Yuexiu Transport Infrastructure | Renesas Electronics vs. Liberty Broadband |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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