Correlation Between Hong Kong and Snam Rete

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

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

Diversification Opportunities for Hong Kong and Snam Rete

-0.11
  Correlation Coefficient
Hong Kong China
Snam Rete Gas

Good diversification

The 3 months correlation between HOKCF and SNMRY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong China and Snam Rete Gas in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Snam Rete Gas 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 China are associated (or correlated) with Snam Rete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam Rete Gas has no effect on the direction of Hong Kong i.e., Hong Kong and Snam Rete go up and down completely randomly.

Pair Corralation between Hong Kong and Snam Rete

Assuming the 90 days horizon Hong Kong China is expected to generate 71.99 times more return on investment than Snam Rete. However, Hong Kong is 71.99 times more volatile than Snam Rete Gas. It trades about 0.14 of its potential returns per unit of risk. Snam Rete Gas is currently generating about 0.03 per unit of risk. If you would invest  180.00  in Hong Kong China on May 1, 2021 and sell it today you would lose (20.00)  from holding Hong Kong China or give up 11.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.02%
ValuesDaily Returns

Hong Kong China  vs.  Snam Rete Gas

 Performance (%) 
      Timeline 
Hong Kong China 
 HOKCF Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hong Kong China are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Hong Kong exhibited solid returns over the last few months and may actually be approaching a breakup point.

HOKCF Price Channel

Snam Rete Gas 
 SNMRY Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Snam Rete Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Snam Rete may actually be approaching a critical reversion point that can send shares even higher in August 2021.

SNMRY Price Channel

Hong Kong and Snam Rete Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Hong Kong and Snam Rete

The main advantage of trading using opposite Hong Kong and Snam Rete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Snam Rete 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 Snam Rete will offset losses from the drop in Snam Rete's long position.
The idea behind Hong Kong China and Snam Rete Gas 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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