Correlation Between Amundi CAC and HSBC MSCI

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

By analyzing existing cross correlation between Amundi CAC 40 and HSBC MSCI Japan, you can compare the effects of market volatilities on Amundi CAC and HSBC MSCI 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 Amundi CAC with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi CAC and HSBC MSCI.

Diversification Opportunities for Amundi CAC and HSBC MSCI

-0.19

Correlation Coefficient

Amundi CAC  HSBC MSCI

Good diversification

The 3 months correlation between Amundi and HSBC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Amundi CAC 40 and HSBC MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI Japan and Amundi CAC 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 Amundi CAC 40 are associated (or correlated) with HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI Japan has no effect on the direction of Amundi CAC i.e., Amundi CAC and HSBC MSCI go up and down completely randomly.

Pair Corralation between Amundi CAC and HSBC MSCI

Assuming the 90 days trading horizon Amundi CAC is expected to generate 1.44 times less return on investment than HSBC MSCI. But when comparing it to its historical volatility, Amundi CAC 40 is 1.32 times less risky than HSBC MSCI. It trades about 0.2 of its potential returns per unit of risk. HSBC MSCI Japan is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,745  in HSBC MSCI Japan on September 13, 2024 and sell it today you would earn a total of  158.00  from holding HSBC MSCI Japan or generate 4.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Amundi CAC 40  vs.  HSBC MSCI Japan

Amundi CAC 40

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi CAC 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Amundi CAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HSBC MSCI Japan

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC MSCI Japan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HSBC MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amundi CAC and HSBC MSCI

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

The idea behind Amundi CAC 40 and HSBC MSCI Japan 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.