Correlation Between G5 Entertainment and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment 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 G5 Entertainment and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment AB and HSBC Holdings plc, you can compare the effects of market volatilities on G5 Entertainment 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 G5 Entertainment with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and HSBC Holdings.
Diversification Opportunities for G5 Entertainment and HSBC Holdings
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between U3I and HSBC is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB 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 G5 Entertainment 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 G5 Entertainment AB 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 G5 Entertainment i.e., G5 Entertainment and HSBC Holdings go up and down completely randomly.
Pair Corralation between G5 Entertainment and HSBC Holdings
Assuming the 90 days horizon G5 Entertainment AB is expected to generate 1.48 times more return on investment than HSBC Holdings. However, G5 Entertainment is 1.48 times more volatile than HSBC Holdings plc. It trades about 0.15 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.1 per unit of risk. If you would invest 998.00 in G5 Entertainment AB on December 12, 2024 and sell it today you would earn a total of 178.00 from holding G5 Entertainment AB or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
G5 Entertainment AB vs. HSBC Holdings plc
Performance |
| Timeline |
| G5 Entertainment |
| HSBC Holdings plc |
G5 Entertainment and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and HSBC Holdings
The main advantage of trading using opposite G5 Entertainment and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment 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.| G5 Entertainment vs. THRACE PLASTICS | ||
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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