Correlation Between WI LAN and HK Electric
Can any of the company-specific risk be diversified away by investing in both WI LAN 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 WI LAN and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WI LAN and HK Electric Investments, you can compare the effects of market volatilities on WI LAN 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 WI LAN with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of WI LAN and HK Electric.
Diversification Opportunities for WI LAN and HK Electric
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WJL and HKT is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding WI LAN 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 WI LAN 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 WI LAN 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 WI LAN i.e., WI LAN and HK Electric go up and down completely randomly.
Pair Corralation between WI LAN and HK Electric
Assuming the 90 days trading horizon WI LAN is expected to generate 5.09 times more return on investment than HK Electric. However, WI LAN is 5.09 times more volatile than HK Electric Investments. It trades about 0.14 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.1 per unit of risk. If you would invest 106.00 in WI LAN on August 31, 2024 and sell it today you would earn a total of 12.00 from holding WI LAN or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WI LAN vs. HK Electric Investments
Performance |
| Timeline |
| WI LAN |
| HK Electric Investments |
WI LAN and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WI LAN and HK Electric
The main advantage of trading using opposite WI LAN and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WI LAN 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.| WI LAN vs. HK Electric Investments | WI LAN vs. Strategic Investments AS | WI LAN vs. New Residential Investment | WI LAN vs. Clean Energy Fuels |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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