Correlation Between Hong Kong and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Becton Dickinson 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 Hong Kong and Becton Dickinson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Exchange and Becton Dickinson and, you can compare the effects of market volatilities on Hong Kong and Becton Dickinson 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 Hong Kong with a short position of Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Becton Dickinson.
Diversification Opportunities for Hong Kong and Becton Dickinson
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hong and Becton is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchange and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson and Hong Kong 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 Hong Kong Exchange are associated (or correlated) with Becton Dickinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becton Dickinson has no effect on the direction of Hong Kong i.e., Hong Kong and Becton Dickinson go up and down completely randomly.
Pair Corralation between Hong Kong and Becton Dickinson
Assuming the 90 days horizon Hong Kong Exchange is expected to under-perform the Becton Dickinson. In addition to that, Hong Kong is 1.13 times more volatile than Becton Dickinson and. It trades about -0.35 of its total potential returns per unit of risk. Becton Dickinson and is currently generating about -0.11 per unit of volatility. If you would invest 24,162 in Becton Dickinson and on January 21, 2024 and sell it today you would lose (750.00) from holding Becton Dickinson and or give up 3.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Hong Kong Exchange vs. Becton Dickinson and
Performance |
Timeline |
Hong Kong Exchange |
Becton Dickinson |
Hong Kong and Becton Dickinson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hong Kong and Becton Dickinson
The main advantage of trading using opposite Hong Kong and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Becton Dickinson 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 Becton Dickinson will offset losses from the drop in Becton Dickinson's long position.The idea behind Hong Kong Exchange and Becton Dickinson and 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.Becton Dickinson vs. Agilent Technologies | Becton Dickinson vs. Illumina | Becton Dickinson vs. Waters | Becton Dickinson vs. Thermo Fisher Scientific |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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