Correlation Between HSCEIRBS and BASFAAB WT

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

By analyzing existing cross correlation between HSCEIRBS CT and BASFAAB WT OPEN, you can compare the effects of market volatilities on HSCEIRBS and BASFAAB WT 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 HSCEIRBS with a short position of BASFAAB WT. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSCEIRBS and BASFAAB WT.

Diversification Opportunities for HSCEIRBS and BASFAAB WT

0.0

Correlation Coefficient

HSCEIRBS  BASFAAB WT

Pay attention - limited upside

The 3 months correlation between HSCEIRBS and BASFAAB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HSCEIRBS CT and BASFAAB WT OPEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASFAAB WT OPEN and HSCEIRBS 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 HSCEIRBS CT are associated (or correlated) with BASFAAB WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASFAAB WT OPEN has no effect on the direction of HSCEIRBS i.e., HSCEIRBS and BASFAAB WT go up and down completely randomly.

Pair Corralation between HSCEIRBS and BASFAAB WT

If you would invest (100.00) in BASFAAB WT OPEN on September 12, 2024 and sell it today you would earn a total of  100.00  from holding BASFAAB WT OPEN or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HSCEIRBS CT  vs.  BASFAAB WT OPEN

HSCEIRBS CT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HSCEIRBS CT has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, HSCEIRBS is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BASFAAB WT OPEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BASFAAB WT OPEN has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, BASFAAB WT is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HSCEIRBS and BASFAAB WT

The main advantage of trading using opposite HSCEIRBS and BASFAAB WT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSCEIRBS position performs unexpectedly, BASFAAB WT 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 BASFAAB WT will offset losses from the drop in BASFAAB WT's long position.

The idea behind HSCEIRBS CT and BASFAAB WT OPEN 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.