Correlation Between First Hawaiian and China Minsh

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

By analyzing existing cross correlation between First Hawaiian and China Minsh, you can compare the effects of market volatilities on First Hawaiian and China Minsh 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 China Minsh. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and China Minsh.

Diversification Opportunities for First Hawaiian and China Minsh

0.12

Correlation Coefficient

First Hawaiian  China Minsh

Average diversification

The 3 months correlation between First and China is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and China Minsh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Minsh 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 China Minsh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Minsh has no effect on the direction of First Hawaiian i.e., First Hawaiian and China Minsh go up and down completely randomly.

Pair Corralation between First Hawaiian and China Minsh

Considering the 90-day investment horizon First Hawaiian is expected to under-perform the China Minsh. In addition to that, First Hawaiian is 1.14 times more volatile than China Minsh. It trades about -0.24 of its total potential returns per unit of risk. China Minsh is currently generating about 0.21 per unit of volatility. If you would invest  376.00  in China Minsh on September 26, 2024 and sell it today you would earn a total of  22.00  from holding China Minsh or generate 5.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Hawaiian  vs.  China Minsh

First Hawaiian

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical indicators, First Hawaiian sustained solid returns over the last few months and may actually be approaching a breakup point.

China Minsh

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Minsh are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward-looking signals, China Minsh may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Hawaiian and China Minsh

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

The idea behind First Hawaiian and China Minsh 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.