Correlation Between NYSE Composite and Oversea-Chinese BankingLimited
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Oversea-Chinese BankingLimited 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 NYSE Composite and Oversea-Chinese BankingLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Oversea Chinese Banking, you can compare the effects of market volatilities on NYSE Composite and Oversea-Chinese BankingLimited 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 NYSE Composite with a short position of Oversea-Chinese BankingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Oversea-Chinese BankingLimited.
Diversification Opportunities for NYSE Composite and Oversea-Chinese BankingLimited
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Oversea-Chinese is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea-Chinese BankingLimited and NYSE Composite 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 NYSE Composite are associated (or correlated) with Oversea-Chinese BankingLimited. 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 BankingLimited has no effect on the direction of NYSE Composite i.e., NYSE Composite and Oversea-Chinese BankingLimited go up and down completely randomly.
Pair Corralation between NYSE Composite and Oversea-Chinese BankingLimited
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.54 times less return on investment than Oversea-Chinese BankingLimited. But when comparing it to its historical volatility, NYSE Composite is 4.65 times less risky than Oversea-Chinese BankingLimited. It trades about 0.08 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 836.00 in Oversea Chinese Banking on August 30, 2024 and sell it today you would earn a total of 296.00 from holding Oversea Chinese Banking or generate 35.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 66.53% |
| Values | Daily Returns |
NYSE Composite vs. Oversea Chinese Banking
Performance |
| Timeline |
NYSE Composite and Oversea-Chinese BankingLimited Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Oversea Chinese Banking
Pair trading matchups for Oversea-Chinese BankingLimited
Pair Trading with NYSE Composite and Oversea-Chinese BankingLimited
The main advantage of trading using opposite NYSE Composite and Oversea-Chinese BankingLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Oversea-Chinese BankingLimited 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 BankingLimited will offset losses from the drop in Oversea-Chinese BankingLimited's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Oversea-Chinese BankingLimited vs. Danske Bank AS | Oversea-Chinese BankingLimited vs. Absa Group Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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