Correlation Between Hang Seng and Merchants Marine
Can any of the company-specific risk be diversified away by investing in both Hang Seng and Merchants Marine 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 Merchants Marine 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 Merchants Marine Bancorp, you can compare the effects of market volatilities on Hang Seng and Merchants Marine 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 Merchants Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Seng and Merchants Marine.
Diversification Opportunities for Hang Seng and Merchants Marine
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hang and Merchants is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng Bank and Merchants Marine Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Marine Bancorp 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 Merchants Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Marine Bancorp has no effect on the direction of Hang Seng i.e., Hang Seng and Merchants Marine go up and down completely randomly.
Pair Corralation between Hang Seng and Merchants Marine
Assuming the 90 days horizon Hang Seng Bank is expected to under-perform the Merchants Marine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hang Seng Bank is 1.46 times less risky than Merchants Marine. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Merchants Marine Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,675 in Merchants Marine Bancorp on September 1, 2024 and sell it today you would earn a total of 645.00 from holding Merchants Marine Bancorp or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 59.68% |
| Values | Daily Returns |
Hang Seng Bank vs. Merchants Marine Bancorp
Performance |
| Timeline |
| Hang Seng Bank |
| Merchants Marine Bancorp |
Hang Seng and Merchants Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hang Seng and Merchants Marine
The main advantage of trading using opposite Hang Seng and Merchants Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hang Seng position performs unexpectedly, Merchants Marine 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 Merchants Marine will offset losses from the drop in Merchants Marine'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 |
| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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