Correlation Between Morgan Stanley and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and Hang Seng Bank, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Hang Seng.
Diversification Opportunities for Morgan Stanley and Hang Seng
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morgan and Hang is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct 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 Morgan Stanley 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 Morgan Stanley Direct 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 Morgan Stanley i.e., Morgan Stanley and Hang Seng go up and down completely randomly.
Pair Corralation between Morgan Stanley and Hang Seng
Given the investment horizon of 90 days Morgan Stanley is expected to generate 3.74 times less return on investment than Hang Seng. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.58 times less risky than Hang Seng. It trades about 0.03 of its potential returns per unit of risk. Hang Seng Bank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 497.00 in Hang Seng Bank on September 23, 2024 and sell it today you would earn a total of 633.00 from holding Hang Seng Bank or generate 127.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 45.76% |
Values | Daily Returns |
Morgan Stanley Direct vs. Hang Seng Bank
Performance |
Timeline |
Morgan Stanley Direct |
Hang Seng Bank |
Morgan Stanley and Hang Seng Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Hang Seng
The main advantage of trading using opposite Morgan Stanley and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.Morgan Stanley vs. United Rentals | Morgan Stanley vs. HE Equipment Services | Morgan Stanley vs. Triton International Limited | Morgan Stanley vs. Ryanair Holdings PLC |
Hang Seng vs. China Merchants Bank | Hang Seng vs. HDFC Bank Limited | Hang Seng vs. ICICI Bank Limited | Hang Seng vs. PT Bank Central |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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