Correlation Between REINET INVESTMENTS and HK Electric
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS 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 REINET INVESTMENTS and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and HK Electric Investments, you can compare the effects of market volatilities on REINET INVESTMENTS 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 REINET INVESTMENTS with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and HK Electric.
Diversification Opportunities for REINET INVESTMENTS and HK Electric
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between REINET and HKT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and HK Electric go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and HK Electric
Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to under-perform the HK Electric. In addition to that, REINET INVESTMENTS is 1.85 times more volatile than HK Electric Investments. It trades about -0.04 of its total potential returns per unit of risk. HK Electric Investments is currently generating about 0.1 per unit of volatility. If you would invest 62.00 in HK Electric Investments on August 31, 2024 and sell it today you would earn a total of 1.00 from holding HK Electric Investments or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REINET INVESTMENTS SCA vs. HK Electric Investments
Performance |
| Timeline |
| REINET INVESTMENTS SCA |
| HK Electric Investments |
REINET INVESTMENTS and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REINET INVESTMENTS and HK Electric
The main advantage of trading using opposite REINET INVESTMENTS and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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.| REINET INVESTMENTS vs. Ameriprise Financial | REINET INVESTMENTS vs. Ares Management Corp | REINET INVESTMENTS vs. Superior Plus Corp | REINET INVESTMENTS vs. NMI Holdings |
| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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