Correlation Between Bank of Utica and Hang Seng

Can any of the company-specific risk be diversified away by investing in both Bank of Utica 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 Bank of Utica and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Utica and Hang Seng Bank, you can compare the effects of market volatilities on Bank of Utica 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 Bank of Utica with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Utica and Hang Seng.

Diversification Opportunities for Bank of Utica and Hang Seng

-0.37

Correlation Coefficient

Bank of Utica  Hang Seng

Very good diversification

The 3 months correlation between Bank and Hang is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica 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 Bank of Utica 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 Bank of Utica 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 Bank of Utica i.e., Bank of Utica and Hang Seng go up and down completely randomly.

Pair Corralation between Bank of Utica and Hang Seng

Given the investment horizon of 90 days Bank of Utica is expected to generate 0.79 times more return on investment than Hang Seng. However, Bank of Utica is 1.27 times less risky than Hang Seng. It trades about 0.21 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.01 per unit of risk. If you would invest  44,000  in Bank of Utica on October 1, 2024 and sell it today you would earn a total of  10,100  from holding Bank of Utica or generate 22.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Bank of Utica  vs.  Hang Seng Bank

Bank of Utica

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hang Seng Bank

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hang Seng Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Hang Seng is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of Utica and Hang Seng

The main advantage of trading using opposite Bank of Utica and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Utica 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.

The idea behind Bank of Utica and Hang Seng Bank 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.