Correlation Analysis Between ISEQ and Hang Seng

Overlapping area represents the amount of risk that can be diversified away by holding ISEQ and Hang Seng in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng and ISEQ 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 ISEQ 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 has no effect on the direction of ISEQ i.e. ISEQ and Hang Seng go up and down completely randomly.