Correlation Between DBS Group and Overseas Chinese
Can any of the company-specific risk be diversified away by investing in both DBS Group and Overseas 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 DBS Group and Overseas Chinese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and Overseas Chinese Banking, you can compare the effects of market volatilities on DBS Group and Overseas 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 DBS Group with a short position of Overseas Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and Overseas Chinese.
Diversification Opportunities for DBS Group and Overseas Chinese
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DBS and Overseas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and Overseas Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overseas Chinese Banking and DBS Group 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 DBS Group Holdings are associated (or correlated) with Overseas Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overseas Chinese Banking has no effect on the direction of DBS Group i.e., DBS Group and Overseas Chinese go up and down completely randomly.
Pair Corralation between DBS Group and Overseas Chinese
Assuming the 90 days horizon DBS Group Holdings is expected to generate 0.99 times more return on investment than Overseas Chinese. However, DBS Group Holdings is 1.01 times less risky than Overseas Chinese. It trades about 0.09 of its potential returns per unit of risk. Overseas Chinese Banking is currently generating about 0.08 per unit of risk. If you would invest 7,896 in DBS Group Holdings on August 30, 2024 and sell it today you would earn a total of 4,574 from holding DBS Group Holdings or generate 57.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBS Group Holdings vs. Overseas Chinese Banking
Performance |
| Timeline |
| DBS Group Holdings |
| Overseas Chinese Banking |
DBS Group and Overseas Chinese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBS Group and Overseas Chinese
The main advantage of trading using opposite DBS Group and Overseas Chinese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group position performs unexpectedly, Overseas 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 Overseas Chinese will offset losses from the drop in Overseas Chinese's long position.| DBS Group vs. Invesco High Income | DBS Group vs. Blackrock Muniholdings Ny | DBS Group vs. Nuveen California Select | DBS Group vs. MFS Investment Grade |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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