Correlation Between HSBC ETFs and HSBC Asia

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

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

Diversification Opportunities for HSBC ETFs and HSBC Asia

-0.13

Correlation Coefficient

HSBC ETFs  HSBC Asia

Good diversification

The 3 months correlation between HSBC and HSBC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding HSBC ETFs Public and HSBC Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Asia Pacific and HSBC ETFs 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 ETFs Public are associated (or correlated) with HSBC Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Asia Pacific has no effect on the direction of HSBC ETFs i.e., HSBC ETFs and HSBC Asia go up and down completely randomly.

Pair Corralation between HSBC ETFs and HSBC Asia

Assuming the 90 days trading horizon HSBC ETFs Public is not expected to generate positive returns. However, HSBC ETFs Public is 18.76 times less risky than HSBC Asia. It waists most of its returns potential to compensate for thr risk taken. HSBC Asia is generating about -0.02 per unit of risk. If you would invest  4,671  in HSBC ETFs Public on December 21, 2024 and sell it today you would earn a total of  0.00  from holding HSBC ETFs Public or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

HSBC ETFs Public  vs.  HSBC Asia Pacific

HSBC ETFs Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC ETFs Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HSBC ETFs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

HSBC Asia Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC Asia Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HSBC Asia is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HSBC ETFs and HSBC Asia

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

The idea behind HSBC ETFs Public and HSBC Asia Pacific 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 Transaction History module to view history of all your transactions and understand their impact on performance.