Correlation Between BOC Hong and Bankinter
Can any of the company-specific risk be diversified away by investing in both BOC Hong and Bankinter 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 BOC Hong and Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOC Hong Kong and Bankinter SA ADR, you can compare the effects of market volatilities on BOC Hong and Bankinter 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 BOC Hong with a short position of Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Hong and Bankinter.
Diversification Opportunities for BOC Hong and Bankinter
Average diversification
The 3 months correlation between BOC and Bankinter is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BOC Hong Kong and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR and BOC Hong 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 BOC Hong Kong are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of BOC Hong i.e., BOC Hong and Bankinter go up and down completely randomly.
Pair Corralation between BOC Hong and Bankinter
Assuming the 90 days horizon BOC Hong is expected to generate 3.82 times less return on investment than Bankinter. But when comparing it to its historical volatility, BOC Hong Kong is 1.43 times less risky than Bankinter. It trades about 0.15 of its potential returns per unit of risk. Bankinter SA ADR is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 781.00 in Bankinter SA ADR on November 3, 2024 and sell it today you would earn a total of 125.00 from holding Bankinter SA ADR or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOC Hong Kong vs. Bankinter SA ADR
Performance |
| Timeline |
| BOC Hong Kong |
| Bankinter SA ADR |
BOC Hong and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOC Hong and Bankinter
The main advantage of trading using opposite BOC Hong and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Hong position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.| BOC Hong vs. Bank of the | BOC Hong vs. China Merchants Bank | BOC Hong vs. BDO Unibank ADR | BOC Hong vs. Bangkok Bank PCL |
| Bankinter vs. Bank Hapoalim ADR | Bankinter vs. Bank of East | Bankinter vs. BOC Hong Kong | Bankinter vs. Commercial International Bank |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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