Correlation Between Hang Seng and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Hang Seng and CHINA EDUCATION 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 Hang Seng and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hang Seng Bank and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Hang Seng and CHINA EDUCATION 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 Hang Seng with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Seng and CHINA EDUCATION.
Diversification Opportunities for Hang Seng and CHINA EDUCATION
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hang and CHINA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng Bank and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Hang Seng 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 Hang Seng Bank are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Hang Seng i.e., Hang Seng and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Hang Seng and CHINA EDUCATION
Assuming the 90 days horizon Hang Seng Bank is expected to generate 0.28 times more return on investment than CHINA EDUCATION. However, Hang Seng Bank is 3.51 times less risky than CHINA EDUCATION. It trades about 0.12 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.21 per unit of risk. If you would invest 1,130 in Hang Seng Bank on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Hang Seng Bank or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hang Seng Bank vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Hang Seng Bank |
| CHINA EDUCATION GROUP |
Hang Seng and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hang Seng and CHINA EDUCATION
The main advantage of trading using opposite Hang Seng and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hang Seng position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Hang Seng vs. HF SINCLAIR P | Hang Seng vs. Bausch Health Companies | Hang Seng vs. Corsair Gaming | Hang Seng vs. DiamondRock Hospitality |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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