Correlation Between HSBC USA and HSBC MSCI

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

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

Diversification Opportunities for HSBC USA and HSBC MSCI

-0.39

Correlation Coefficient

HSBC USA  HSBC MSCI

Very good diversification

The 3 months correlation between HSBC and HSBC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HSBC USA Sustainable and HSBC MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI China and HSBC USA 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 USA Sustainable are associated (or correlated) with HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI China has no effect on the direction of HSBC USA i.e., HSBC USA and HSBC MSCI go up and down completely randomly.

Pair Corralation between HSBC USA and HSBC MSCI

Assuming the 90 days trading horizon HSBC USA Sustainable is expected to under-perform the HSBC MSCI. But the etf apears to be less risky and, when comparing its historical volatility, HSBC USA Sustainable is 1.45 times less risky than HSBC MSCI. The etf trades about -0.12 of its potential returns per unit of risk. The HSBC MSCI China is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  620.00  in HSBC MSCI China on December 29, 2024 and sell it today you would earn a total of  73.00  from holding HSBC MSCI China or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

HSBC USA Sustainable  vs.  HSBC MSCI China

HSBC USA Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC USA Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

HSBC MSCI China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC MSCI China are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HSBC MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HSBC USA and HSBC MSCI

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

The idea behind HSBC USA Sustainable and HSBC MSCI China 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.