Correlation Between HSBC Developed and HSBC USA

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

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

Diversification Opportunities for HSBC Developed and HSBC USA

0.0

Correlation Coefficient

HSBC Developed  HSBC USA

Pay attention - limited upside

The 3 months correlation between HSBC and HSBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Developed World and HSBC USA Screened in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC USA Screened and HSBC Developed 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 HSBC Developed World 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 Screened has no effect on the direction of HSBC Developed i.e., HSBC Developed and HSBC USA go up and down completely randomly.

Pair Corralation between HSBC Developed and HSBC USA

If you would invest  2,531  in HSBC Developed World on May 13, 2025 and sell it today you would earn a total of  188.00  from holding HSBC Developed World or generate 7.43% return on investment over 90 days.

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

HSBC Developed World  vs.  HSBC USA Screened

HSBC Developed World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Developed World are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, HSBC Developed may actually be approaching a critical reversion point that can send shares even higher in September 2025.

HSBC USA Screened

Risk-Adjusted Performance

Weakest

Over the last 90 days HSBC USA Screened has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HSBC USA is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HSBC Developed and HSBC USA

The main advantage of trading using opposite HSBC Developed and HSBC USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Developed 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 HSBC Developed World and HSBC USA Screened 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.