Correlation Between Southern BancShares and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Southern BancShares 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 Southern BancShares and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern BancShares NC and Hang Seng Bank, you can compare the effects of market volatilities on Southern BancShares 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 Southern BancShares with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern BancShares and Hang Seng.
Diversification Opportunities for Southern BancShares and Hang Seng
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Hang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Southern BancShares NC 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 Southern BancShares 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 Southern BancShares NC 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 Southern BancShares i.e., Southern BancShares and Hang Seng go up and down completely randomly.
Pair Corralation between Southern BancShares and Hang Seng
Given the investment horizon of 90 days Southern BancShares NC is expected to generate 1.24 times more return on investment than Hang Seng. However, Southern BancShares is 1.24 times more volatile than Hang Seng Bank. It trades about 0.18 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.04 per unit of risk. If you would invest 610,101 in Southern BancShares NC on August 30, 2024 and sell it today you would earn a total of 114,899 from holding Southern BancShares NC or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern BancShares NC vs. Hang Seng Bank
Performance |
| Timeline |
| Southern BancShares |
| Hang Seng Bank |
Southern BancShares and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern BancShares and Hang Seng
The main advantage of trading using opposite Southern BancShares and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern BancShares 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.| Southern BancShares vs. Nmb Financial Corp | Southern BancShares vs. Hang Seng Bank | Southern BancShares vs. Merchants Marine Bancorp | Southern BancShares vs. Mission Valley Bancorp |
| Hang Seng vs. Caixabank SA ADR | Hang Seng vs. Commercial International Bank | Hang Seng vs. PT Bank Rakyat | Hang Seng vs. Riverview 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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