Correlation Between Promotora and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and HSBC Holdings plc, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and HSBC Holdings.
Diversification Opportunities for Promotora and HSBC Holdings
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Promotora and HSBC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora 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 Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and HSBC Holdings go up and down completely randomly.
Pair Corralation between Promotora and HSBC Holdings
Assuming the 90 days trading horizon Promotora is expected to generate 2.05 times less return on investment than HSBC Holdings. In addition to that, Promotora is 1.08 times more volatile than HSBC Holdings plc. It trades about 0.03 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.07 per unit of volatility. If you would invest 57,167 in HSBC Holdings plc on September 4, 2024 and sell it today you would earn a total of 36,333 from holding HSBC Holdings plc or generate 63.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Promotora y Operadora vs. HSBC Holdings plc
Performance |
| Timeline |
| Promotora y Operadora |
| HSBC Holdings plc |
Promotora and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and HSBC Holdings
The main advantage of trading using opposite Promotora and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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