Correlation Between Oversea Chinese and Postal Savings
Can any of the company-specific risk be diversified away by investing in both Oversea Chinese and Postal Savings 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 Oversea Chinese and Postal Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oversea Chinese Banking and Postal Savings Bank, you can compare the effects of market volatilities on Oversea Chinese and Postal Savings 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 Oversea Chinese with a short position of Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oversea Chinese and Postal Savings.
Diversification Opportunities for Oversea Chinese and Postal Savings
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oversea and Postal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oversea Chinese Banking and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank and Oversea Chinese 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 Oversea Chinese Banking are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Oversea Chinese i.e., Oversea Chinese and Postal Savings go up and down completely randomly.
Pair Corralation between Oversea Chinese and Postal Savings
Assuming the 90 days trading horizon Oversea Chinese is expected to generate 2.06 times less return on investment than Postal Savings. But when comparing it to its historical volatility, Oversea Chinese Banking is 3.27 times less risky than Postal Savings. It trades about 0.14 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Postal Savings Bank on November 1, 2024 and sell it today you would earn a total of 13.00 from holding Postal Savings Bank or generate 30.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oversea Chinese Banking vs. Postal Savings Bank
Performance |
| Timeline |
| Oversea Chinese Banking |
| Postal Savings Bank |
Oversea Chinese and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oversea Chinese and Postal Savings
The main advantage of trading using opposite Oversea Chinese and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oversea Chinese position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| Oversea Chinese vs. POSBO UNSPADRS20YC1 | Oversea Chinese vs. Postal Savings Bank | Oversea Chinese vs. Truist Financial | Oversea Chinese vs. OVERSEA CHINUNSPADR2 |
| Postal Savings vs. Apollo Investment Corp | Postal Savings vs. Japan Asia Investment | Postal Savings vs. AGNC INVESTMENT | Postal Savings vs. Gladstone Investment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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