Correlation Between Swiss Leader and HSBC EMERGING
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and HSBC EMERGING 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 Swiss Leader and HSBC EMERGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and HSBC EMERGING MARKET, you can compare the effects of market volatilities on Swiss Leader and HSBC EMERGING 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 Swiss Leader with a short position of HSBC EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and HSBC EMERGING.
Diversification Opportunities for Swiss Leader and HSBC EMERGING
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swiss and HSBC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and HSBC EMERGING MARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC EMERGING MARKET and Swiss Leader 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 Swiss Leader Price are associated (or correlated) with HSBC EMERGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC EMERGING MARKET has no effect on the direction of Swiss Leader i.e., Swiss Leader and HSBC EMERGING go up and down completely randomly.
Pair Corralation between Swiss Leader and HSBC EMERGING
Assuming the 90 days trading horizon Swiss Leader is expected to generate 3.62 times less return on investment than HSBC EMERGING. But when comparing it to its historical volatility, Swiss Leader Price is 1.17 times less risky than HSBC EMERGING. It trades about 0.02 of its potential returns per unit of risk. HSBC EMERGING MARKET is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,382 in HSBC EMERGING MARKET on September 3, 2024 and sell it today you would earn a total of 134.00 from holding HSBC EMERGING MARKET or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Swiss Leader Price vs. HSBC EMERGING MARKET
Performance |
| Timeline |
Swiss Leader and HSBC EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
HSBC EMERGING MARKET
Pair trading matchups for HSBC EMERGING
Pair Trading with Swiss Leader and HSBC EMERGING
The main advantage of trading using opposite Swiss Leader and HSBC EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, HSBC EMERGING 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 EMERGING will offset losses from the drop in HSBC EMERGING's long position.| Swiss Leader vs. VP Bank AG | Swiss Leader vs. Basler Kantonalbank | Swiss Leader vs. Thurgauer Kantonalbank | Swiss Leader vs. Liechtensteinische Landesbank AG |
| HSBC EMERGING vs. HSBC USA SUSTAINABLE | HSBC EMERGING vs. HSBC MSCI Europe | HSBC EMERGING vs. HSBC MSCI Japan | HSBC EMERGING vs. HSBC DEVELOPED WORLD |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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