Correlation Between First Hawaiian and Oversea-Chinese BankingLimited
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Oversea-Chinese BankingLimited 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 First Hawaiian and Oversea-Chinese BankingLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Oversea Chinese Banking, you can compare the effects of market volatilities on First Hawaiian and Oversea-Chinese BankingLimited 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 First Hawaiian with a short position of Oversea-Chinese BankingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Oversea-Chinese BankingLimited.
Diversification Opportunities for First Hawaiian and Oversea-Chinese BankingLimited
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Oversea-Chinese is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea-Chinese BankingLimited and First Hawaiian 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 First Hawaiian are associated (or correlated) with Oversea-Chinese BankingLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea-Chinese BankingLimited has no effect on the direction of First Hawaiian i.e., First Hawaiian and Oversea-Chinese BankingLimited go up and down completely randomly.
Pair Corralation between First Hawaiian and Oversea-Chinese BankingLimited
Considering the 90-day investment horizon First Hawaiian is expected to generate 3.09 times less return on investment than Oversea-Chinese BankingLimited. But when comparing it to its historical volatility, First Hawaiian is 1.68 times less risky than Oversea-Chinese BankingLimited. It trades about 0.03 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 836.00 in Oversea Chinese Banking on September 4, 2024 and sell it today you would earn a total of 404.00 from holding Oversea Chinese Banking or generate 48.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 66.26% |
| Values | Daily Returns |
First Hawaiian vs. Oversea Chinese Banking
Performance |
| Timeline |
| First Hawaiian |
| Oversea-Chinese BankingLimited |
First Hawaiian and Oversea-Chinese BankingLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Oversea-Chinese BankingLimited
The main advantage of trading using opposite First Hawaiian and Oversea-Chinese BankingLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited will offset losses from the drop in Oversea-Chinese BankingLimited's long position.| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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