Correlation Between Hong Kong and Innovative Industrial

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

By analyzing existing cross correlation between Hong Kong Land and Innovative Industrial Properties, you can compare the effects of market volatilities on Hong Kong and Innovative Industrial 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 Hong Kong with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Innovative Industrial.

Diversification Opportunities for Hong Kong and Innovative Industrial

0.0

Correlation Coefficient

Hong Kong  Innovative Industrial

Pay attention - limited upside

The 3 months correlation between Hong and Innovative is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and Hong Kong 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 Hong Kong Land are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Hong Kong i.e., Hong Kong and Innovative Industrial go up and down completely randomly.

Pair Corralation between Hong Kong and Innovative Industrial

Assuming the 90 days trading horizon Hong Kong is expected to generate 167.71 times less return on investment than Innovative Industrial. But when comparing it to its historical volatility, Hong Kong Land is 274.33 times less risky than Innovative Industrial. It trades about 0.08 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,170  in Innovative Industrial Properties on September 12, 2024 and sell it today you would earn a total of  3,563  from holding Innovative Industrial Properties or generate 49.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.44%
Values	Daily Returns

Hong Kong Land  vs.  Innovative Industrial Properti

Hong Kong Land

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Hong Kong Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hong Kong is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Innovative Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovative Industrial Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hong Kong and Innovative Industrial

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

The idea behind Hong Kong Land and Innovative Industrial Properties 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.