Correlation Between Hang Seng and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Hang Seng and Standard Bank 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 Standard Bank 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 Standard Bank Group, you can compare the effects of market volatilities on Hang Seng and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Seng and Standard Bank.
Diversification Opportunities for Hang Seng and Standard Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hang and Standard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng Bank and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Hang Seng i.e., Hang Seng and Standard Bank go up and down completely randomly.
Pair Corralation between Hang Seng and Standard Bank
Assuming the 90 days horizon Hang Seng Bank is expected to generate 1.12 times more return on investment than Standard Bank. However, Hang Seng is 1.12 times more volatile than Standard Bank Group. It trades about -0.04 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.06 per unit of risk. If you would invest 1,238 in Hang Seng Bank on August 28, 2024 and sell it today you would lose (21.00) from holding Hang Seng Bank or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hang Seng Bank vs. Standard Bank Group
Performance |
| Timeline |
| Hang Seng Bank |
| Standard Bank Group |
Hang Seng and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hang Seng and Standard Bank
The main advantage of trading using opposite Hang Seng and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hang Seng position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank'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 |
| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |