Correlation Between Multi Units and HSBC MSCI

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

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

Diversification Opportunities for Multi Units and HSBC MSCI

-0.63

Correlation Coefficient

Multi Units  HSBC MSCI

Excellent diversification

The 3 months correlation between Multi and HSBC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units France 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 Multi Units 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 Multi Units France 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 Multi Units i.e., Multi Units and HSBC MSCI go up and down completely randomly.

Pair Corralation between Multi Units and HSBC MSCI

Assuming the 90 days trading horizon Multi Units France is expected to under-perform the HSBC MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Multi Units France is 1.91 times less risky than HSBC MSCI. The etf trades about -0.25 of its potential returns per unit of risk. The HSBC MSCI China is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  603.00  in HSBC MSCI China on November 30, 2024 and sell it today you would earn a total of  123.00  from holding HSBC MSCI China or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Multi Units France  vs.  HSBC MSCI China

Multi Units France

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Units France has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing 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 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HSBC MSCI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Units and HSBC MSCI

The main advantage of trading using opposite Multi Units and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Units 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 Multi Units France 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.

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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.