Correlation Between Amundi Treasury and HSBC Emerging

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

By analyzing existing cross correlation between Amundi Treasury Bond and HSBC Emerging Market, you can compare the effects of market volatilities on Amundi Treasury and HSBC Emerging 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 Amundi Treasury with a short position of HSBC Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi Treasury and HSBC Emerging.

Diversification Opportunities for Amundi Treasury and HSBC Emerging

-0.37

Correlation Coefficient

Amundi Treasury  HSBC Emerging

Very good diversification

The 3 months correlation between Amundi and HSBC is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Amundi Treasury Bond and HSBC Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Emerging Market and Amundi Treasury 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 Amundi Treasury Bond are associated (or correlated) with HSBC Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Emerging Market has no effect on the direction of Amundi Treasury i.e., Amundi Treasury and HSBC Emerging go up and down completely randomly.

Pair Corralation between Amundi Treasury and HSBC Emerging

Assuming the 90 days trading horizon Amundi Treasury Bond is expected to under-perform the HSBC Emerging. But the etf apears to be less risky and, when comparing its historical volatility, Amundi Treasury Bond is 1.42 times less risky than HSBC Emerging. The etf trades about -0.06 of its potential returns per unit of risk. The HSBC Emerging Market is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,467  in HSBC Emerging Market on September 3, 2024 and sell it today you would earn a total of  57.00  from holding HSBC Emerging Market or generate 3.89% return on investment over 90 days.

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

Amundi Treasury Bond  vs.  HSBC Emerging Market

Amundi Treasury Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi Treasury Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amundi Treasury is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

HSBC Emerging Market

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Emerging Market are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HSBC Emerging is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amundi Treasury and HSBC Emerging

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

The idea behind Amundi Treasury Bond and HSBC Emerging Market 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.