Correlation Between 21Shares Polkadot and HSBC Developed

Can any of the company-specific risk be diversified away by investing in both 21Shares Polkadot and HSBC Developed 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 21Shares Polkadot and HSBC Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 21Shares Polkadot ETP and HSBC Developed World, you can compare the effects of market volatilities on 21Shares Polkadot and HSBC Developed 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 21Shares Polkadot with a short position of HSBC Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Polkadot and HSBC Developed.

Diversification Opportunities for 21Shares Polkadot and HSBC Developed

0.01

Correlation Coefficient

21Shares Polkadot  HSBC Developed

Significant diversification

The 3 months correlation between 21Shares and HSBC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and HSBC Developed World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Developed World and 21Shares Polkadot 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 21Shares Polkadot ETP are associated (or correlated) with HSBC Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Developed World has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and HSBC Developed go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and HSBC Developed

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to under-perform the HSBC Developed. In addition to that, 21Shares Polkadot is 5.86 times more volatile than HSBC Developed World. It trades about -0.1 of its total potential returns per unit of risk. HSBC Developed World is currently generating about -0.03 per unit of volatility. If you would invest  2,334  in HSBC Developed World on December 22, 2024 and sell it today you would lose (63.00) from holding HSBC Developed World or give up 2.7% of portfolio value over 90 days.

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

21Shares Polkadot ETP  vs.  HSBC Developed World

21Shares Polkadot ETP

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Polkadot ETP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

HSBC Developed World

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC Developed World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HSBC Developed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 21Shares Polkadot and HSBC Developed

The main advantage of trading using opposite 21Shares Polkadot and HSBC Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 21Shares Polkadot position performs unexpectedly, HSBC Developed 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 Developed will offset losses from the drop in HSBC Developed's long position.

The idea behind 21Shares Polkadot ETP and HSBC Developed World 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .