Correlation Between Asia Plus and UOB Kay
Can any of the company-specific risk be diversified away by investing in both Asia Plus and UOB Kay 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 Asia Plus and UOB Kay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Plus Group and UOB Kay Hian, you can compare the effects of market volatilities on Asia Plus and UOB Kay 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 Asia Plus with a short position of UOB Kay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Plus and UOB Kay.
Diversification Opportunities for Asia Plus and UOB Kay
Very weak diversification
The 3 months correlation between Asia and UOB is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and UOB Kay Hian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOB Kay Hian and Asia Plus 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 Asia Plus Group are associated (or correlated) with UOB Kay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UOB Kay Hian has no effect on the direction of Asia Plus i.e., Asia Plus and UOB Kay go up and down completely randomly.
Pair Corralation between Asia Plus and UOB Kay
Assuming the 90 days trading horizon Asia Plus Group is expected to under-perform the UOB Kay. But the stock apears to be less risky and, when comparing its historical volatility, Asia Plus Group is 53.64 times less risky than UOB Kay. The stock trades about -0.02 of its potential returns per unit of risk. The UOB Kay Hian is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 476.00 in UOB Kay Hian on September 3, 2024 and sell it today you would earn a total of 54.00 from holding UOB Kay Hian or generate 11.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Plus Group vs. UOB Kay Hian
Performance |
| Timeline |
| Asia Plus Group |
| UOB Kay Hian |
Asia Plus and UOB Kay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Plus and UOB Kay
The main advantage of trading using opposite Asia Plus and UOB Kay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Plus position performs unexpectedly, UOB Kay 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 UOB Kay will offset losses from the drop in UOB Kay's long position.| Asia Plus vs. KGI Securities Public | Asia Plus vs. Bangkok Bank Public | Asia Plus vs. Land and Houses | Asia Plus vs. Italian Thai Development Public |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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