Correlation Between First Hawaiian and PKSHA TECHNOLOGY

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Can any of the company-specific risk be diversified away by investing in both First Hawaiian and PKSHA TECHNOLOGY 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 First Hawaiian and PKSHA TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on First Hawaiian and PKSHA TECHNOLOGY 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 First Hawaiian with a short position of PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and PKSHA TECHNOLOGY.

Diversification Opportunities for First Hawaiian and PKSHA TECHNOLOGY

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between First and PKSHA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC and First Hawaiian 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 First Hawaiian are associated (or correlated) with PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of First Hawaiian i.e., First Hawaiian and PKSHA TECHNOLOGY go up and down completely randomly.

Pair Corralation between First Hawaiian and PKSHA TECHNOLOGY

Assuming the 90 days horizon First Hawaiian is expected to generate 0.6 times more return on investment than PKSHA TECHNOLOGY. However, First Hawaiian is 1.68 times less risky than PKSHA TECHNOLOGY. It trades about -0.23 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about -0.3 per unit of risk. If you would invest  2,580  in First Hawaiian on October 8, 2024 and sell it today you would lose (140.00) from holding First Hawaiian or give up 5.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

First Hawaiian  vs.  PKSHA TECHNOLOGY INC

 Performance 
       Timeline  
First Hawaiian 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, First Hawaiian reported solid returns over the last few months and may actually be approaching a breakup point.
PKSHA TECHNOLOGY INC 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY reported solid returns over the last few months and may actually be approaching a breakup point.

First Hawaiian and PKSHA TECHNOLOGY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Hawaiian and PKSHA TECHNOLOGY

The main advantage of trading using opposite First Hawaiian and PKSHA TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY will offset losses from the drop in PKSHA TECHNOLOGY's long position.
The idea behind First Hawaiian and PKSHA TECHNOLOGY INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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