Correlation Between Sage Group and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Sage Group 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 Sage Group and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and HSBC Holdings PLC, you can compare the effects of market volatilities on Sage Group 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 Sage Group with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and HSBC Holdings.
Diversification Opportunities for Sage Group and HSBC Holdings
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sage and HSBC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC 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 Sage Group 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 Sage Group PLC 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 Sage Group i.e., Sage Group and HSBC Holdings go up and down completely randomly.
Pair Corralation between Sage Group and HSBC Holdings
Assuming the 90 days trading horizon Sage Group PLC is expected to under-perform the HSBC Holdings. In addition to that, Sage Group is 1.23 times more volatile than HSBC Holdings PLC. It trades about -0.01 of its total potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.28 per unit of volatility. If you would invest 75,010 in HSBC Holdings PLC on October 10, 2024 and sell it today you would earn a total of 2,590 from holding HSBC Holdings PLC or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Group PLC vs. HSBC Holdings PLC
Performance |
| Timeline |
| Sage Group PLC |
| HSBC Holdings PLC |
Sage Group and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and HSBC Holdings
The main advantage of trading using opposite Sage Group and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group 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.| Sage Group vs. Cornish Metals | Sage Group vs. Zoom Video Communications | Sage Group vs. Naked Wines plc | Sage Group vs. Bisichi Mining PLC |
| HSBC Holdings vs. Nordea Bank Abp | HSBC Holdings vs. Naked Wines plc | HSBC Holdings vs. Virgin Wines UK | HSBC Holdings vs. Sparebank 1 SR |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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