Correlation Between Postal Savings and Oversea Chinese
Can any of the company-specific risk be diversified away by investing in both Postal Savings and Oversea Chinese 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 Postal Savings and Oversea Chinese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Oversea Chinese Banking, you can compare the effects of market volatilities on Postal Savings and Oversea Chinese 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 Postal Savings with a short position of Oversea Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Oversea Chinese.
Diversification Opportunities for Postal Savings and Oversea Chinese
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Postal and Oversea is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea Chinese Banking and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Oversea Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea Chinese Banking has no effect on the direction of Postal Savings i.e., Postal Savings and Oversea Chinese go up and down completely randomly.
Pair Corralation between Postal Savings and Oversea Chinese
Assuming the 90 days horizon Postal Savings Bank is expected to generate 5.64 times more return on investment than Oversea Chinese. However, Postal Savings is 5.64 times more volatile than Oversea Chinese Banking. It trades about 0.09 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.08 per unit of risk. If you would invest 5.53 in Postal Savings Bank on November 1, 2024 and sell it today you would earn a total of 50.47 from holding Postal Savings Bank or generate 912.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Postal Savings Bank vs. Oversea Chinese Banking
Performance |
| Timeline |
| Postal Savings Bank |
| Oversea Chinese Banking |
Postal Savings and Oversea Chinese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Oversea Chinese
The main advantage of trading using opposite Postal Savings and Oversea Chinese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, Oversea Chinese 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 Oversea Chinese will offset losses from the drop in Oversea Chinese's long position.| Postal Savings vs. Apollo Investment Corp | Postal Savings vs. Japan Asia Investment | Postal Savings vs. AGNC INVESTMENT | Postal Savings vs. Gladstone Investment |
| Oversea Chinese vs. POSBO UNSPADRS20YC1 | Oversea Chinese vs. Postal Savings Bank | Oversea Chinese vs. Truist Financial | Oversea Chinese vs. OVERSEA CHINUNSPADR2 |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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