Correlation Between Hang Seng and Bank of Utica

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

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

Diversification Opportunities for Hang Seng and Bank of Utica

-0.37

Correlation Coefficient

Hang Seng  Bank of Utica

Very good diversification

The 3 months correlation between Hang and Bank is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng Bank and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica and Hang Seng 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 Hang Seng Bank are associated (or correlated) with Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of Hang Seng i.e., Hang Seng and Bank of Utica go up and down completely randomly.

Pair Corralation between Hang Seng and Bank of Utica

Assuming the 90 days horizon Hang Seng is expected to generate 2.32 times less return on investment than Bank of Utica. But when comparing it to its historical volatility, Hang Seng Bank is 1.34 times less risky than Bank of Utica. It trades about 0.03 of its potential returns per unit of risk. Bank of Utica is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  42,952  in Bank of Utica on October 1, 2024 and sell it today you would earn a total of  11,148  from holding Bank of Utica or generate 25.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.54%
Values	Daily Returns

Hang Seng Bank  vs.  Bank of Utica

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.

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.

Pair Trading with Hang Seng and Bank of Utica

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

The idea behind Hang Seng Bank and Bank of Utica 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.