Correlation Between BOC Hong and Broadway Financial
Can any of the company-specific risk be diversified away by investing in both BOC Hong and Broadway Financial 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 Broadway Financial 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 Broadway Financial, you can compare the effects of market volatilities on BOC Hong and Broadway Financial 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 Broadway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Hong and Broadway Financial.
Diversification Opportunities for BOC Hong and Broadway Financial
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BOC and Broadway is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BOC Hong Kong and Broadway Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadway Financial 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 Broadway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadway Financial has no effect on the direction of BOC Hong i.e., BOC Hong and Broadway Financial go up and down completely randomly.
Pair Corralation between BOC Hong and Broadway Financial
Assuming the 90 days horizon BOC Hong is expected to generate 13.44 times less return on investment than Broadway Financial. But when comparing it to its historical volatility, BOC Hong Kong is 2.17 times less risky than Broadway Financial. It trades about 0.02 of its potential returns per unit of risk. Broadway Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 661.00 in Broadway Financial on August 28, 2024 and sell it today you would earn a total of 60.00 from holding Broadway Financial or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BOC Hong Kong vs. Broadway Financial
Performance |
| Timeline |
| BOC Hong Kong |
| Broadway Financial |
BOC Hong and Broadway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOC Hong and Broadway Financial
The main advantage of trading using opposite BOC Hong and Broadway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Hong position performs unexpectedly, Broadway Financial 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 Broadway Financial will offset losses from the drop in Broadway Financial'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 |
| Broadway Financial vs. Community West Bancshares | Broadway Financial vs. First Northwest Bancorp | Broadway Financial vs. First Financial Northwest | Broadway Financial vs. First Capital |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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