Correlation Between Otc Markets and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Otc Markets and Hong Kong 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 Otc Markets and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otc Markets Group and Hong Kong Exchange, you can compare the effects of market volatilities on Otc Markets and Hong Kong 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 Otc Markets with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otc Markets and Hong Kong.
Diversification Opportunities for Otc Markets and Hong Kong
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Otc and Hong is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Otc Markets Group and Hong Kong Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Exchange and Otc Markets 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 Otc Markets Group are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Exchange has no effect on the direction of Otc Markets i.e., Otc Markets and Hong Kong go up and down completely randomly.
Pair Corralation between Otc Markets and Hong Kong
Given the investment horizon of 90 days Otc Markets Group is expected to generate 0.7 times more return on investment than Hong Kong. However, Otc Markets Group is 1.43 times less risky than Hong Kong. It trades about 0.01 of its potential returns per unit of risk. Hong Kong Exchange is currently generating about -0.02 per unit of risk. If you would invest 5,118 in Otc Markets Group on January 21, 2024 and sell it today you would earn a total of 137.00 from holding Otc Markets Group or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Otc Markets Group vs. Hong Kong Exchange
Performance |
| Timeline |
| Otc Markets Group |
| Hong Kong Exchange |
Otc Markets and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otc Markets and Hong Kong
The main advantage of trading using opposite Otc Markets and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otc Markets position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Otc Markets vs. Pfizer Inc | Otc Markets vs. Heartland Financial USA | Otc Markets vs. Conflux Network | Otc Markets vs. Citigroup Capital XIII |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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