Correlation Between HK Electric and ArcBest

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

By analyzing existing cross correlation between HK Electric Investments and ArcBest, you can compare the effects of market volatilities on HK Electric and ArcBest 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 HK Electric with a short position of ArcBest. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and ArcBest.

Diversification Opportunities for HK Electric and ArcBest

-0.3

Correlation Coefficient

HK Electric  ArcBest

Very good diversification

The 3 months correlation between HKT and ArcBest is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and ArcBest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest and HK Electric 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 HK Electric Investments are associated (or correlated) with ArcBest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest has no effect on the direction of HK Electric i.e., HK Electric and ArcBest go up and down completely randomly.

Pair Corralation between HK Electric and ArcBest

Assuming the 90 days trading horizon HK Electric is expected to generate 251.71 times less return on investment than ArcBest. But when comparing it to its historical volatility, HK Electric Investments is 3.14 times less risky than ArcBest. It trades about 0.0 of its potential returns per unit of risk. ArcBest is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  9,300  in ArcBest on October 21, 2024 and sell it today you would earn a total of  550.00  from holding ArcBest or generate 5.91% return on investment over 90 days.

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

HK Electric Investments  vs.  ArcBest

HK Electric Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HK Electric Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HK Electric is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ArcBest

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ArcBest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ArcBest may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HK Electric and ArcBest

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

The idea behind HK Electric Investments and ArcBest 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..