Correlation Between Tokyo Electron and HK Electric
Can any of the company-specific risk be diversified away by investing in both Tokyo Electron 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 Tokyo Electron and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electron Limited and HK Electric Investments, you can compare the effects of market volatilities on Tokyo Electron 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 Tokyo Electron with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and HK Electric.
Diversification Opportunities for Tokyo Electron and HK Electric
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tokyo and HKT is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron Limited 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 Tokyo Electron 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 Tokyo Electron Limited 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 Tokyo Electron i.e., Tokyo Electron and HK Electric go up and down completely randomly.
Pair Corralation between Tokyo Electron and HK Electric
Assuming the 90 days horizon Tokyo Electron is expected to generate 2.36 times less return on investment than HK Electric. But when comparing it to its historical volatility, Tokyo Electron Limited is 1.15 times less risky than HK Electric. It trades about 0.05 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17.00 in HK Electric Investments on August 31, 2024 and sell it today you would earn a total of 45.00 from holding HK Electric Investments or generate 264.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tokyo Electron Limited vs. HK Electric Investments
Performance |
| Timeline |
| Tokyo Electron |
| HK Electric Investments |
Tokyo Electron and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyo Electron and HK Electric
The main advantage of trading using opposite Tokyo Electron and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electron 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.| Tokyo Electron vs. EAT WELL INVESTMENT | Tokyo Electron vs. INTERSHOP Communications Aktiengesellschaft | Tokyo Electron vs. Chunghwa Telecom Co | Tokyo Electron vs. JAPAN TOBACCO UNSPADR12 |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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