Correlation Between Dah Sing and First Bancorp

Can any of the company-specific risk be diversified away by investing in both Dah Sing and First Bancorp 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 Dah Sing and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dah Sing Financial and First Bancorp, you can compare the effects of market volatilities on Dah Sing and First Bancorp 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 Dah Sing with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dah Sing and First Bancorp.

Diversification Opportunities for Dah Sing and First Bancorp

-0.48

Correlation Coefficient

Dah Sing  First Bancorp

Very good diversification

The 3 months correlation between Dah and First is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dah Sing Financial and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Dah Sing 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 Dah Sing Financial are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Dah Sing i.e., Dah Sing and First Bancorp go up and down completely randomly.

Pair Corralation between Dah Sing and First Bancorp

Assuming the 90 days horizon Dah Sing Financial is expected to generate 2.71 times more return on investment than First Bancorp. However, Dah Sing is 2.71 times more volatile than First Bancorp. It trades about 0.05 of its potential returns per unit of risk. First Bancorp is currently generating about 0.06 per unit of risk. If you would invest  602.00  in Dah Sing Financial on September 25, 2024 and sell it today you would earn a total of  401.00  from holding Dah Sing Financial or generate 66.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.93%
Values	Daily Returns

Dah Sing Financial  vs.  First Bancorp

Dah Sing Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dah Sing Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dah Sing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Dah Sing and First Bancorp

The main advantage of trading using opposite Dah Sing and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dah Sing position performs unexpectedly, First Bancorp 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 Bancorp will offset losses from the drop in First Bancorp's long position.

The idea behind Dah Sing Financial and First Bancorp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.