Correlation Between HSBC Holdings and Thermo Fisher
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Thermo Fisher 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 HSBC Holdings and Thermo Fisher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and Thermo Fisher Scientific, you can compare the effects of market volatilities on HSBC Holdings and Thermo Fisher 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 HSBC Holdings with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Thermo Fisher.
Diversification Opportunities for HSBC Holdings and Thermo Fisher
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and Thermo is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and HSBC Holdings 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 HSBC Holdings plc are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Thermo Fisher go up and down completely randomly.
Pair Corralation between HSBC Holdings and Thermo Fisher
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 2.02 times more return on investment than Thermo Fisher. However, HSBC Holdings is 2.02 times more volatile than Thermo Fisher Scientific. It trades about 0.13 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.12 per unit of risk. If you would invest 76,171 in HSBC Holdings plc on September 25, 2024 and sell it today you would earn a total of 17,329 from holding HSBC Holdings plc or generate 22.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
HSBC Holdings plc vs. Thermo Fisher Scientific
Performance |
Timeline |
HSBC Holdings plc |
Thermo Fisher Scientific |
HSBC Holdings and Thermo Fisher Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HSBC Holdings and Thermo Fisher
The main advantage of trading using opposite HSBC Holdings and Thermo Fisher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Thermo Fisher 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 Thermo Fisher will offset losses from the drop in Thermo Fisher's long position.HSBC Holdings vs. UBS Group AG | HSBC Holdings vs. The Bank of | HSBC Holdings vs. ING Groep NV | HSBC Holdings vs. Barclays PLC |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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