Correlation Between Aquagold International and HSBC Holdings

Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and HSBC Holdings PLC, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and HSBC Holdings.

Diversification Opportunities for Aquagold International and HSBC Holdings

0.0

Correlation Coefficient

Aquagold International  HSBC Holdings

Pay attention - limited upside

The 3 months correlation between Aquagold and HSBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International 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 Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and HSBC Holdings go up and down completely randomly.

Pair Corralation between Aquagold International and HSBC Holdings

Given the investment horizon of 90 days Aquagold International is expected to generate 38.19 times more return on investment than HSBC Holdings. However, Aquagold International is 38.19 times more volatile than HSBC Holdings PLC. It trades about 0.06 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  21.00  in Aquagold International on September 12, 2024 and sell it today you would lose (20.40) from holding Aquagold International or give up 97.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aquagold International  vs.  HSBC Holdings PLC

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

HSBC Holdings PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Holdings PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, HSBC Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aquagold International and HSBC Holdings

The main advantage of trading using opposite Aquagold International and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International and HSBC Holdings PLC 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.