Correlation Between Gas Natural and Hong Kong

By analyzing existing cross correlation between Gas Natural Sdg and Hong Kong China, you can compare the effects of market volatilities on Gas Natural 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 Gas Natural with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gas Natural and Hong Kong.

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

Diversification Opportunities for Gas Natural and Hong Kong

0.0
  Correlation Coefficient
Gas Natural Sdg
Hong Kong China

Pay attention - limited upside

The 3 months correlation between GASNF and HOKCF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gas Natural Sdg and Hong Kong China in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong China and Gas Natural 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 Gas Natural Sdg 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 China has no effect on the direction of Gas Natural i.e., Gas Natural and Hong Kong go up and down completely randomly.

Pair Corralation between Gas Natural and Hong Kong

If you would invest  0.00  in Hong Kong China on May 1, 2021 and sell it today you would earn a total of  0.00  from holding Hong Kong China or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Gas Natural Sdg  vs.  Hong Kong China

 Performance (%) 
      Timeline 
Gas Natural Sdg 
 GASNF Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Gas Natural Sdg are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Gas Natural is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

GASNF Price Channel

Hong Kong China 
 HOKCF Performance
0 of 100
Over the last 90 days Hong Kong China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Hong Kong is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Gas Natural and Hong Kong Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Gas Natural and Hong Kong

The main advantage of trading using opposite Gas Natural and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gas Natural 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.

Gas Natural Sdg

Pair trading matchups for Gas Natural

The idea behind Gas Natural Sdg and Hong Kong China 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.

Hong Kong China

Pair trading matchups for Hong Kong

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Hong Kong as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Hong Kong's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Hong Kong's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Hong Kong China.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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