Correlation Between Hang Seng and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both Hang Seng and Magyar 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 Hang Seng and Magyar Bancorp 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 Magyar Bancorp, you can compare the effects of market volatilities on Hang Seng and Magyar 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 Hang Seng with a short position of Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Seng and Magyar Bancorp.
Diversification Opportunities for Hang Seng and Magyar Bancorp
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hang and Magyar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng Bank and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Hang Seng i.e., Hang Seng and Magyar Bancorp go up and down completely randomly.
Pair Corralation between Hang Seng and Magyar Bancorp
Assuming the 90 days horizon Hang Seng Bank is expected to under-perform the Magyar Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hang Seng Bank is 1.01 times less risky than Magyar Bancorp. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Magyar Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,238 in Magyar Bancorp on October 3, 2024 and sell it today you would earn a total of 222.00 from holding Magyar Bancorp or generate 17.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.95% |
Values | Daily Returns |
Hang Seng Bank vs. Magyar Bancorp
Performance |
Timeline |
Hang Seng Bank |
Magyar Bancorp |
Hang Seng and Magyar Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hang Seng and Magyar Bancorp
The main advantage of trading using opposite Hang Seng and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hang Seng position performs unexpectedly, Magyar 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp's long position.Hang Seng vs. Caixabank SA ADR | Hang Seng vs. Commercial International Bank | Hang Seng vs. PT Bank Rakyat | Hang Seng vs. Riverview Bancorp |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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