Correlation Between Itochu Corp and United Overseas
Can any of the company-specific risk be diversified away by investing in both Itochu Corp 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 Itochu Corp and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itochu Corp ADR and United Overseas Bank, you can compare the effects of market volatilities on Itochu Corp 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 Itochu Corp with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itochu Corp and United Overseas.
Diversification Opportunities for Itochu Corp and United Overseas
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Itochu and United is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Itochu Corp ADR 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 Itochu Corp 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 Itochu Corp ADR 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 Itochu Corp i.e., Itochu Corp and United Overseas go up and down completely randomly.
Pair Corralation between Itochu Corp and United Overseas
Assuming the 90 days horizon Itochu Corp ADR is expected to under-perform the United Overseas. But the pink sheet apears to be less risky and, when comparing its historical volatility, Itochu Corp ADR is 1.32 times less risky than United Overseas. The pink sheet trades about -0.07 of its potential returns per unit of risk. The United Overseas Bank is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,902 in United Overseas Bank on August 30, 2024 and sell it today you would earn a total of 534.00 from holding United Overseas Bank or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Itochu Corp ADR vs. United Overseas Bank
Performance |
| Timeline |
| Itochu Corp ADR |
| United Overseas Bank |
Itochu Corp and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itochu Corp and United Overseas
The main advantage of trading using opposite Itochu Corp and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itochu Corp 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.| Itochu Corp vs. Marubeni Corp ADR | Itochu Corp vs. Sumitomo Corp ADR | Itochu Corp vs. Mitsubishi Corp | Itochu Corp vs. Hitachi Ltd ADR |
| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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