Correlation Between Hang Seng and Caixabank
Can any of the company-specific risk be diversified away by investing in both Hang Seng and Caixabank 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 Caixabank 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 Caixabank SA ADR, you can compare the effects of market volatilities on Hang Seng and Caixabank 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 Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Seng and Caixabank.
Diversification Opportunities for Hang Seng and Caixabank
Good diversification
The 3 months correlation between Hang and Caixabank is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng Bank and Caixabank SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA ADR 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 Caixabank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank SA ADR has no effect on the direction of Hang Seng i.e., Hang Seng and Caixabank go up and down completely randomly.
Pair Corralation between Hang Seng and Caixabank
Assuming the 90 days horizon Hang Seng Bank is expected to generate 0.97 times more return on investment than Caixabank. However, Hang Seng Bank is 1.03 times less risky than Caixabank. It trades about 0.04 of its potential returns per unit of risk. Caixabank SA ADR is currently generating about -0.07 per unit of risk. If you would invest 1,178 in Hang Seng Bank on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Hang Seng Bank or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hang Seng Bank vs. Caixabank SA ADR
Performance |
| Timeline |
| Hang Seng Bank |
| Caixabank SA ADR |
Hang Seng and Caixabank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hang Seng and Caixabank
The main advantage of trading using opposite Hang Seng and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hang Seng position performs unexpectedly, Caixabank 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 Caixabank will offset losses from the drop in Caixabank's long position.| Hang Seng vs. Caixabank SA ADR | Hang Seng vs. Commercial International Bank | Hang Seng vs. PT Bank Rakyat | Hang Seng vs. Riverview Bancorp |
| Caixabank vs. Permanent TSB Group | Caixabank vs. Bank of Botetourt | Caixabank vs. Cashmere Valley Bank | Caixabank vs. Oak Valley 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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