Correlation Between China Everbright and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both China Everbright and First Hawaiian 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 China Everbright and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Everbright Bank and First Hawaiian, you can compare the effects of market volatilities on China Everbright and First Hawaiian 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 China Everbright with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Everbright and First Hawaiian.
Diversification Opportunities for China Everbright and First Hawaiian
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Everbright Bank and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and China Everbright 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 China Everbright Bank are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of China Everbright i.e., China Everbright and First Hawaiian go up and down completely randomly.
Pair Corralation between China Everbright and First Hawaiian
Assuming the 90 days horizon China Everbright Bank is expected to generate 1.72 times more return on investment than First Hawaiian. However, China Everbright is 1.72 times more volatile than First Hawaiian. It trades about 0.05 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.03 per unit of risk. If you would invest 20.00 in China Everbright Bank on September 4, 2024 and sell it today you would earn a total of 19.00 from holding China Everbright Bank or generate 95.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Everbright Bank vs. First Hawaiian
Performance |
| Timeline |
| China Everbright Bank |
| First Hawaiian |
China Everbright and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Everbright and First Hawaiian
The main advantage of trading using opposite China Everbright and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Everbright position performs unexpectedly, First Hawaiian 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 First Hawaiian will offset losses from the drop in First Hawaiian's long position.| China Everbright vs. First Hawaiian | China Everbright vs. Central Pacific Financial | China Everbright vs. Territorial Bancorp | China Everbright vs. Comerica |
| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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