Correlation Between PSB Holdings and Hang Seng
Can any of the company-specific risk be diversified away by investing in both PSB Holdings and Hang Seng 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 PSB Holdings and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and Hang Seng Bank, you can compare the effects of market volatilities on PSB Holdings and Hang Seng 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 PSB Holdings with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Hang Seng.
Diversification Opportunities for PSB Holdings and Hang Seng
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PSB and Hang is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank and PSB Holdings 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 PSB Holdings are associated (or correlated) with Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of PSB Holdings i.e., PSB Holdings and Hang Seng go up and down completely randomly.
Pair Corralation between PSB Holdings and Hang Seng
Given the investment horizon of 90 days PSB Holdings is expected to generate 0.6 times more return on investment than Hang Seng. However, PSB Holdings is 1.66 times less risky than Hang Seng. It trades about 0.08 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.02 per unit of risk. If you would invest 2,000 in PSB Holdings on August 26, 2024 and sell it today you would earn a total of 790.00 from holding PSB Holdings or generate 39.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 73.38% |
| Values | Daily Returns |
PSB Holdings vs. Hang Seng Bank
Performance |
| Timeline |
| PSB Holdings |
| Hang Seng Bank |
PSB Holdings and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PSB Holdings and Hang Seng
The main advantage of trading using opposite PSB Holdings and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.| PSB Holdings vs. Eagle Financial Services | PSB Holdings vs. National Capital Bank | PSB Holdings vs. Community Heritage Financial | PSB Holdings vs. Citizens Financial Corp |
| Hang Seng vs. Standard Bank Group | Hang Seng vs. PSB Holdings | Hang Seng vs. United Overseas Bank | Hang Seng vs. Turkiye Garanti Bankasi |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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