Correlation Between First Community and Hang Seng
Can any of the company-specific risk be diversified away by investing in both First Community 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 First Community and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community Financial and Hang Seng Bank, you can compare the effects of market volatilities on First Community 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 First Community with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Hang Seng.
Diversification Opportunities for First Community and Hang Seng
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Hang is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial 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 First Community 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 Community Financial 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 First Community i.e., First Community and Hang Seng go up and down completely randomly.
Pair Corralation between First Community and Hang Seng
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Hang Seng. In addition to that, First Community is 1.55 times more volatile than Hang Seng Bank. It trades about -0.19 of its total potential returns per unit of risk. Hang Seng Bank is currently generating about -0.04 per unit of volatility. If you would invest 1,215 in Hang Seng Bank on August 30, 2024 and sell it today you would lose (52.00) from holding Hang Seng Bank or give up 4.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Financial vs. Hang Seng Bank
Performance |
| Timeline |
| First Community Financial |
| Hang Seng Bank |
First Community and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Hang Seng
The main advantage of trading using opposite First Community and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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.| First Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
| Hang Seng vs. Caixabank SA ADR | Hang Seng vs. Commercial International Bank | Hang Seng vs. PT Bank Rakyat | Hang Seng vs. Riverview Bancorp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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