Correlation Between Commercial International and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Commercial International and Hang Seng 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 Commercial International and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial International Bank and Hang Seng Bank, you can compare the effects of market volatilities on Commercial International and Hang Seng 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 Commercial International with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and Hang Seng.
Diversification Opportunities for Commercial International and Hang Seng
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commercial and Hang is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank and Commercial International 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 Commercial International Bank are associated (or correlated) with Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of Commercial International i.e., Commercial International and Hang Seng go up and down completely randomly.
Pair Corralation between Commercial International and Hang Seng
Assuming the 90 days horizon Commercial International Bank is expected to generate 2.55 times more return on investment than Hang Seng. However, Commercial International is 2.55 times more volatile than Hang Seng Bank. It trades about 0.05 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.22 per unit of risk. If you would invest 150.00 in Commercial International Bank on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Commercial International Bank or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial International Bank vs. Hang Seng Bank
Performance |
| Timeline |
| Commercial International |
| Hang Seng Bank |
Commercial International and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial International and Hang Seng
The main advantage of trading using opposite Commercial International and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial International position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.| Commercial International vs. PSB Holdings | Commercial International vs. United Overseas Bank | Commercial International vs. Turkiye Garanti Bankasi |
| Hang Seng vs. Permanent TSB Group | Hang Seng vs. Japan Post Holdings | Hang Seng vs. Commercial International Bank | Hang Seng vs. Kasikornbank Public Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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