Correlation Between FRACTAL GAMING and HSBC Holdings

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

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

Diversification Opportunities for FRACTAL GAMING and HSBC Holdings

0.79

Correlation Coefficient

FRACTAL GAMING  HSBC Holdings

Poor diversification

The 3 months correlation between FRACTAL and HSBC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding FRACTAL GAMING GROUP 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 FRACTAL GAMING 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 FRACTAL GAMING GROUP 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 FRACTAL GAMING i.e., FRACTAL GAMING and HSBC Holdings go up and down completely randomly.

Pair Corralation between FRACTAL GAMING and HSBC Holdings

Assuming the 90 days horizon FRACTAL GAMING GROUP is expected to generate 1.47 times more return on investment than HSBC Holdings. However, FRACTAL GAMING is 1.47 times more volatile than HSBC Holdings plc. It trades about 0.13 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.19 per unit of risk. If you would invest  267.00  in FRACTAL GAMING GROUP on December 21, 2024 and sell it today you would earn a total of  55.00  from holding FRACTAL GAMING GROUP or generate 20.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

FRACTAL GAMING GROUP  vs.  HSBC Holdings plc

FRACTAL GAMING GROUP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FRACTAL GAMING GROUP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, FRACTAL GAMING reported solid returns over the last few months and may actually be approaching a breakup point.

HSBC Holdings plc

Risk-Adjusted Performance

Good

Over the last 90 days HSBC Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak fundamental indicators, HSBC Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FRACTAL GAMING and HSBC Holdings

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

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..