Correlation Between TRON and HSBC SP
Can any of the company-specific risk be diversified away by investing in both TRON and HSBC SP 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 TRON and HSBC SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and HSBC SP 500, you can compare the effects of market volatilities on TRON and HSBC SP 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 TRON with a short position of HSBC SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and HSBC SP.
Diversification Opportunities for TRON and HSBC SP
Poor diversification
The 3 months correlation between TRON and HSBC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding TRON and HSBC SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC SP 500 and TRON 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 TRON are associated (or correlated) with HSBC SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC SP 500 has no effect on the direction of TRON i.e., TRON and HSBC SP go up and down completely randomly.
Pair Corralation between TRON and HSBC SP
Assuming the 90 days trading horizon TRON is expected to generate 14.7 times more return on investment than HSBC SP. However, TRON is 14.7 times more volatile than HSBC SP 500. It trades about 0.08 of its potential returns per unit of risk. HSBC SP 500 is currently generating about 0.17 per unit of risk. If you would invest 15.00 in TRON on November 2, 2024 and sell it today you would earn a total of 10.00 from holding TRON or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.13% |
| Values | Daily Returns |
TRON vs. HSBC SP 500
Performance |
| Timeline |
| TRON |
| HSBC SP 500 |
TRON and HSBC SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and HSBC SP
The main advantage of trading using opposite TRON and HSBC SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, HSBC SP 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 SP will offset losses from the drop in HSBC SP's long position.The idea behind TRON and HSBC SP 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HSBC SP vs. HSBC MSCI China | HSBC SP vs. HSBC Emerging Market | HSBC SP vs. HSBC USA Sustainable | HSBC SP vs. HSBC MSCI Japan |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |