Correlation Between HK Electric and INVION
Can any of the company-specific risk be diversified away by investing in both HK Electric and INVION 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 HK Electric and INVION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and INVION, you can compare the effects of market volatilities on HK Electric and INVION 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 HK Electric with a short position of INVION. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and INVION.
Diversification Opportunities for HK Electric and INVION
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between HKT and INVION is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and INVION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVION and HK Electric 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 HK Electric Investments are associated (or correlated) with INVION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVION has no effect on the direction of HK Electric i.e., HK Electric and INVION go up and down completely randomly.
Pair Corralation between HK Electric and INVION
Assuming the 90 days trading horizon HK Electric is expected to generate 34.05 times less return on investment than INVION. But when comparing it to its historical volatility, HK Electric Investments is 20.28 times less risky than INVION. It trades about 0.06 of its potential returns per unit of risk. INVION is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15.00 in INVION on September 25, 2024 and sell it today you would earn a total of 2.00 from holding INVION or generate 13.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
HK Electric Investments vs. INVION
Performance |
Timeline |
HK Electric Investments |
INVION |
HK Electric and INVION Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HK Electric and INVION
The main advantage of trading using opposite HK Electric and INVION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, INVION 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 INVION will offset losses from the drop in INVION's long position.HK Electric vs. SBA Communications Corp | HK Electric vs. IMPERIAL TOBACCO | HK Electric vs. Consolidated Communications Holdings | HK Electric vs. GAMING FAC SA |
INVION vs. HK Electric Investments | INVION vs. AGNC INVESTMENT | INVION vs. JLF INVESTMENT | INVION vs. Nok Airlines PCL |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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