This module allows you to analyze existing cross correlation between Hang Seng and BSE. You can compare the effects of market volatilities on Hang Seng and BSE 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 BSE. See also your portfolio center
. Please also check ongoing floating volatility patterns of Hang Seng
Hang Seng vs. BSE
Given the investment horizon of 30 days, Hang Seng is expected to under-perform the BSE. In addition to that, Hang Seng is 1.45 times more volatile than BSE. It trades about -0.18 of its total potential returns per unit of risk. BSE is currently generating about 0.14 per unit of volatility. If you would invest 3,554,826 in BSE on June 17, 2018 and sell it today you would earn a total of 82,339 from holding BSE or generate 2.32% return on investment over 30 days.
Pair Corralation between Hang Seng and BSE
|Time Period||1 Month [change]|
Almost no diversification
Overlapping area represents the amount of risk that can be diversified away by holding Hang Seng and BSE in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on BSE 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 are associated (or correlated) with BSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSE has no effect on the direction of Hang Seng i.e. Hang Seng and BSE go up and down completely randomly.
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