Correlation Between HK Electric and INTERNET INJPADR

Can any of the company-specific risk be diversified away by investing in both HK Electric and INTERNET INJPADR 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 INTERNET INJPADR 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 INTERNET INJPADR 1, you can compare the effects of market volatilities on HK Electric and INTERNET INJPADR 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 INTERNET INJPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and INTERNET INJPADR.

Diversification Opportunities for HK Electric and INTERNET INJPADR

-0.26

Correlation Coefficient

HK Electric  INTERNET INJPADR

Very good diversification

The 3 months correlation between HKT and INTERNET is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and INTERNET INJPADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNET INJPADR 1 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 INTERNET INJPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNET INJPADR 1 has no effect on the direction of HK Electric i.e., HK Electric and INTERNET INJPADR go up and down completely randomly.

Pair Corralation between HK Electric and INTERNET INJPADR

Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.32 times more return on investment than INTERNET INJPADR. However, HK Electric Investments is 3.13 times less risky than INTERNET INJPADR. It trades about 0.0 of its potential returns per unit of risk. INTERNET INJPADR 1 is currently generating about -0.13 per unit of risk. If you would invest  64.00  in HK Electric Investments on December 21, 2024 and sell it today you would earn a total of  0.00  from holding HK Electric Investments or generate 0.0% 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.  INTERNET INJPADR 1

HK Electric Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days HK Electric Investments has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

INTERNET INJPADR 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNET INJPADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HK Electric and INTERNET INJPADR

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

The idea behind HK Electric Investments and INTERNET INJPADR 1 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.