Correlation Between HSBC Holdings and Elevance Health,

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

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

Diversification Opportunities for HSBC Holdings and Elevance Health,

-0.7

Correlation Coefficient

HSBC Holdings  Elevance Health,

Excellent diversification

The 3 months correlation between HSBC and Elevance is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Elevance Health, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevance Health, and HSBC Holdings 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 HSBC Holdings plc are associated (or correlated) with Elevance Health,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevance Health, has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Elevance Health, go up and down completely randomly.

Pair Corralation between HSBC Holdings and Elevance Health,

Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 1.22 times more return on investment than Elevance Health,. However, HSBC Holdings is 1.22 times more volatile than Elevance Health,. It trades about 0.22 of its potential returns per unit of risk. Elevance Health, is currently generating about -0.02 per unit of risk. If you would invest  6,732  in HSBC Holdings plc on October 6, 2024 and sell it today you would earn a total of  769.00  from holding HSBC Holdings plc or generate 11.42% return on investment over 90 days.

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

HSBC Holdings plc  vs.  Elevance Health,

HSBC Holdings plc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Holdings plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HSBC Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Elevance Health,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HSBC Holdings and Elevance Health,

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

The idea behind HSBC Holdings plc and Elevance Health, 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.