Correlation Between China Resources and United Overseas
Can any of the company-specific risk be diversified away by investing in both China Resources and United Overseas 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 China Resources and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Land and United Overseas Bank, you can compare the effects of market volatilities on China Resources and United Overseas 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 China Resources with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and United Overseas.
Diversification Opportunities for China Resources and United Overseas
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and United is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and China Resources 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 China Resources Land are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of China Resources i.e., China Resources and United Overseas go up and down completely randomly.
Pair Corralation between China Resources and United Overseas
Assuming the 90 days horizon China Resources Land is expected to generate 4.17 times more return on investment than United Overseas. However, China Resources is 4.17 times more volatile than United Overseas Bank. It trades about 0.07 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.13 per unit of risk. If you would invest 191.00 in China Resources Land on September 3, 2024 and sell it today you would earn a total of 81.00 from holding China Resources Land or generate 42.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Land vs. United Overseas Bank
Performance |
| Timeline |
| China Resources Land |
| United Overseas Bank |
China Resources and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and United Overseas
The main advantage of trading using opposite China Resources and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' long position.| China Resources vs. QURATE RETAIL INC | China Resources vs. SPARTAN STORES | China Resources vs. FAST RETAIL ADR | China Resources vs. Computer And Technologies |
| United Overseas vs. Waste Management | United Overseas vs. Bumrungrad Hospital Public | United Overseas vs. American Eagle Outfitters | United Overseas vs. Jacquet Metal Service |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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