Correlation Between BOC Hong and Swedbank
Can any of the company-specific risk be diversified away by investing in both BOC Hong and Swedbank 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 Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on BOC Hong and Swedbank 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 Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Hong and Swedbank.
Diversification Opportunities for BOC Hong and Swedbank
Excellent diversification
The 3 months correlation between BOC and Swedbank is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BOC Hong Kong and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of BOC Hong i.e., BOC Hong and Swedbank go up and down completely randomly.
Pair Corralation between BOC Hong and Swedbank
Assuming the 90 days horizon BOC Hong Kong is expected to generate 0.9 times more return on investment than Swedbank. However, BOC Hong Kong is 1.11 times less risky than Swedbank. It trades about 0.09 of its potential returns per unit of risk. Swedbank AB is currently generating about 0.07 per unit of risk. If you would invest 4,877 in BOC Hong Kong on August 24, 2024 and sell it today you would earn a total of 1,745 from holding BOC Hong Kong or generate 35.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
BOC Hong Kong vs. Swedbank AB
Performance |
| Timeline |
| BOC Hong Kong |
| Swedbank AB |
BOC Hong and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOC Hong and Swedbank
The main advantage of trading using opposite BOC Hong and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Hong position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank'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 |
| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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