Correlation Between Pan Asia and HATTON NATIONAL

Can any of the company-specific risk be diversified away by investing in both Pan Asia and HATTON NATIONAL 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 Pan Asia and HATTON NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pan Asia Banking and HATTON NATIONAL BANK, you can compare the effects of market volatilities on Pan Asia and HATTON NATIONAL 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 Pan Asia with a short position of HATTON NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Asia and HATTON NATIONAL.

Diversification Opportunities for Pan Asia and HATTON NATIONAL

0.96

Correlation Coefficient

Pan Asia  HATTON NATIONAL

Almost no diversification

The 3 months correlation between Pan and HATTON is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pan Asia Banking and HATTON NATIONAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HATTON NATIONAL BANK and Pan Asia 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 Pan Asia Banking are associated (or correlated) with HATTON NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HATTON NATIONAL BANK has no effect on the direction of Pan Asia i.e., Pan Asia and HATTON NATIONAL go up and down completely randomly.

Pair Corralation between Pan Asia and HATTON NATIONAL

Assuming the 90 days trading horizon Pan Asia is expected to generate 1.19 times less return on investment than HATTON NATIONAL. In addition to that, Pan Asia is 1.0 times more volatile than HATTON NATIONAL BANK. It trades about 0.4 of its total potential returns per unit of risk. HATTON NATIONAL BANK is currently generating about 0.47 per unit of volatility. If you would invest  23,050  in HATTON NATIONAL BANK on October 27, 2024 and sell it today you would earn a total of  6,950  from holding HATTON NATIONAL BANK or generate 30.15% return on investment over 90 days.

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

Pan Asia Banking  vs.  HATTON NATIONAL BANK

Pan Asia Banking

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Asia Banking are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pan Asia sustained solid returns over the last few months and may actually be approaching a breakup point.

HATTON NATIONAL BANK

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in HATTON NATIONAL BANK are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HATTON NATIONAL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pan Asia and HATTON NATIONAL

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

The idea behind Pan Asia Banking and HATTON NATIONAL BANK 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.