Correlation Between Overseas Chinese and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both Overseas Chinese and First Hawaiian 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 Overseas Chinese and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overseas Chinese Banking and First Hawaiian, you can compare the effects of market volatilities on Overseas Chinese and First Hawaiian 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 Overseas Chinese with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overseas Chinese and First Hawaiian.
Diversification Opportunities for Overseas Chinese and First Hawaiian
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Overseas and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Chinese Banking and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Overseas Chinese 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 Overseas Chinese Banking are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of Overseas Chinese i.e., Overseas Chinese and First Hawaiian go up and down completely randomly.
Pair Corralation between Overseas Chinese and First Hawaiian
Assuming the 90 days horizon Overseas Chinese is expected to generate 1.29 times less return on investment than First Hawaiian. But when comparing it to its historical volatility, Overseas Chinese Banking is 1.37 times less risky than First Hawaiian. It trades about 0.1 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,879 in First Hawaiian on August 26, 2024 and sell it today you would earn a total of 911.00 from holding First Hawaiian or generate 48.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Overseas Chinese Banking vs. First Hawaiian
Performance |
| Timeline |
| Overseas Chinese Banking |
| First Hawaiian |
Overseas Chinese and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overseas Chinese and First Hawaiian
The main advantage of trading using opposite Overseas Chinese and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overseas Chinese position performs unexpectedly, First Hawaiian 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 First Hawaiian will offset losses from the drop in First Hawaiian's long position.| Overseas Chinese vs. Swedbank AB | Overseas Chinese vs. KBC Groep NV | Overseas Chinese vs. Nordea Bank Abp | Overseas Chinese vs. DBS Group Holdings |
| First Hawaiian vs. Fifth Third Bancorp | First Hawaiian vs. Zions Bancorporation | First Hawaiian vs. Huntington Bancshares Incorporated | First Hawaiian vs. PNC Financial Services |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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