Correlation Between Delhi Bank and BOC Hong

Can any of the company-specific risk be diversified away by investing in both Delhi Bank and BOC Hong 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 Delhi Bank and BOC Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delhi Bank Corp and BOC Hong Kong, you can compare the effects of market volatilities on Delhi Bank and BOC Hong 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 Delhi Bank with a short position of BOC Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delhi Bank and BOC Hong.

Diversification Opportunities for Delhi Bank and BOC Hong

0.53

Correlation Coefficient

Delhi Bank  BOC Hong

Very weak diversification

The 3 months correlation between Delhi and BOC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Delhi Bank Corp and BOC Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Hong Kong and Delhi Bank 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 Delhi Bank Corp are associated (or correlated) with BOC Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Hong Kong has no effect on the direction of Delhi Bank i.e., Delhi Bank and BOC Hong go up and down completely randomly.

Pair Corralation between Delhi Bank and BOC Hong

Given the investment horizon of 90 days Delhi Bank is expected to generate 170.67 times less return on investment than BOC Hong. But when comparing it to its historical volatility, Delhi Bank Corp is 7.0 times less risky than BOC Hong. It trades about 0.0 of its potential returns per unit of risk. BOC Hong Kong is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,013  in BOC Hong Kong on September 4, 2024 and sell it today you would earn a total of  143.00  from holding BOC Hong Kong or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Delhi Bank Corp  vs.  BOC Hong Kong

Delhi Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delhi Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BOC Hong Kong

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BOC Hong Kong are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, BOC Hong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delhi Bank and BOC Hong

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

The idea behind Delhi Bank Corp and BOC Hong Kong 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.