Correlation Between HSBC Holdings and Amcor Plc

Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Amcor Plc 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 Amcor Plc 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 Amcor plc, you can compare the effects of market volatilities on HSBC Holdings and Amcor Plc 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 Amcor Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Amcor Plc.

Diversification Opportunities for HSBC Holdings and Amcor Plc

-0.73

Correlation Coefficient

HSBC Holdings  Amcor Plc

Pay attention - limited upside

The 3 months correlation between HSBC and Amcor is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Amcor plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor plc 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 Amcor Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor plc has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Amcor Plc go up and down completely randomly.

Pair Corralation between HSBC Holdings and Amcor Plc

Given the investment horizon of 90 days HSBC Holdings PLC is expected to generate 0.61 times more return on investment than Amcor Plc. However, HSBC Holdings PLC is 1.64 times less risky than Amcor Plc. It trades about 0.24 of its potential returns per unit of risk. Amcor plc is currently generating about -0.15 per unit of risk. If you would invest  4,371  in HSBC Holdings PLC on October 21, 2024 and sell it today you would earn a total of  692.00  from holding HSBC Holdings PLC or generate 15.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

HSBC Holdings PLC  vs.  Amcor plc

HSBC Holdings PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Holdings PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, HSBC Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Amcor plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HSBC Holdings and Amcor Plc

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

The idea behind HSBC Holdings PLC and Amcor plc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.