Correlation Between TMX Group and Hong Kong
Can any of the company-specific risk be diversified away by investing in both TMX Group and Hong Kong 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 TMX Group and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMX Group Limited and Hong Kong Exchange, you can compare the effects of market volatilities on TMX Group and Hong Kong 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 TMX Group with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMX Group and Hong Kong.
Diversification Opportunities for TMX Group and Hong Kong
Good diversification
The 3 months correlation between TMX and Hong is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding TMX Group Limited and Hong Kong Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Exchange and TMX Group 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 TMX Group Limited are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Exchange has no effect on the direction of TMX Group i.e., TMX Group and Hong Kong go up and down completely randomly.
Pair Corralation between TMX Group and Hong Kong
Assuming the 90 days horizon TMX Group Limited is expected to under-perform the Hong Kong. But the pink sheet apears to be less risky and, when comparing its historical volatility, TMX Group Limited is 3.14 times less risky than Hong Kong. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Hong Kong Exchange is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,671 in Hong Kong Exchange on September 25, 2024 and sell it today you would earn a total of 162.00 from holding Hong Kong Exchange or generate 4.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
TMX Group Limited vs. Hong Kong Exchange
Performance |
Timeline |
TMX Group Limited |
Hong Kong Exchange |
TMX Group and Hong Kong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TMX Group and Hong Kong
The main advantage of trading using opposite TMX Group and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMX Group position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.TMX Group vs. Citizens Financial Corp | TMX Group vs. Farmers Bancorp | TMX Group vs. Alpine Banks of | TMX Group vs. Taylor Calvin B |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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