Correlation Between Orient Telecoms and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Orient Telecoms 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 Orient Telecoms and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Telecoms and HSBC Holdings PLC, you can compare the effects of market volatilities on Orient Telecoms 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 Orient Telecoms with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Telecoms and HSBC Holdings.
Diversification Opportunities for Orient Telecoms and HSBC Holdings
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Orient and HSBC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Orient Telecoms 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 Orient Telecoms 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 Orient Telecoms 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 Orient Telecoms i.e., Orient Telecoms and HSBC Holdings go up and down completely randomly.
Pair Corralation between Orient Telecoms and HSBC Holdings
Assuming the 90 days trading horizon Orient Telecoms is expected to under-perform the HSBC Holdings. In addition to that, Orient Telecoms is 1.24 times more volatile than HSBC Holdings PLC. It trades about -0.02 of its total potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.16 per unit of volatility. If you would invest 65,058 in HSBC Holdings PLC on October 26, 2024 and sell it today you would earn a total of 17,872 from holding HSBC Holdings PLC or generate 27.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orient Telecoms vs. HSBC Holdings PLC
Performance |
| Timeline |
| Orient Telecoms |
| HSBC Holdings PLC |
Orient Telecoms and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Telecoms and HSBC Holdings
The main advantage of trading using opposite Orient Telecoms and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Telecoms 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.| Orient Telecoms vs. bet at home AG | Orient Telecoms vs. Evolution Gaming Group | Orient Telecoms vs. Monster Beverage Corp | Orient Telecoms vs. Fevertree Drinks Plc |
| HSBC Holdings vs. Orient Telecoms | HSBC Holdings vs. Foresight Environmental Infrastructure | HSBC Holdings vs. Zegona Communications Plc | HSBC Holdings vs. Electronic Arts |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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