Correlation Between Manitou BF and HSBC USA

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

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

Diversification Opportunities for Manitou BF and HSBC USA

0.53

Correlation Coefficient

Manitou BF  HSBC USA

Very weak diversification

The 3 months correlation between Manitou and HSBC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and HSBC USA Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC USA Sustainable and Manitou BF 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 Manitou BF SA are associated (or correlated) with HSBC USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC USA Sustainable has no effect on the direction of Manitou BF i.e., Manitou BF and HSBC USA go up and down completely randomly.

Pair Corralation between Manitou BF and HSBC USA

Assuming the 90 days trading horizon Manitou BF SA is expected to generate 4.02 times more return on investment than HSBC USA. However, Manitou BF is 4.02 times more volatile than HSBC USA Sustainable. It trades about 0.29 of its potential returns per unit of risk. HSBC USA Sustainable is currently generating about -0.02 per unit of risk. If you would invest  1,540  in Manitou BF SA on December 2, 2024 and sell it today you would earn a total of  730.00  from holding Manitou BF SA or generate 47.4% return on investment over 90 days.

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

Manitou BF SA  vs.  HSBC USA Sustainable

Manitou BF SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Manitou BF sustained solid returns over the last few months and may actually be approaching a breakup point.

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 somewhat strong basic indicators, HSBC USA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Manitou BF and HSBC USA

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

The idea behind Manitou BF SA and HSBC USA Sustainable 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.