Correlation Between Oversea-Chinese BankingLimited and MEBUKI FINANCIAL
Can any of the company-specific risk be diversified away by investing in both Oversea-Chinese BankingLimited and MEBUKI FINANCIAL 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 BankingLimited and MEBUKI FINANCIAL 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 MEBUKI FINANCIAL GROUP, you can compare the effects of market volatilities on Oversea-Chinese BankingLimited and MEBUKI FINANCIAL 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 BankingLimited with a short position of MEBUKI FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oversea-Chinese BankingLimited and MEBUKI FINANCIAL.
Diversification Opportunities for Oversea-Chinese BankingLimited and MEBUKI FINANCIAL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oversea-Chinese and MEBUKI is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Oversea Chinese Banking and MEBUKI FINANCIAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEBUKI FINANCIAL and Oversea-Chinese BankingLimited 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 MEBUKI FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEBUKI FINANCIAL has no effect on the direction of Oversea-Chinese BankingLimited i.e., Oversea-Chinese BankingLimited and MEBUKI FINANCIAL go up and down completely randomly.
Pair Corralation between Oversea-Chinese BankingLimited and MEBUKI FINANCIAL
Assuming the 90 days trading horizon Oversea-Chinese BankingLimited is expected to generate 1.47 times less return on investment than MEBUKI FINANCIAL. But when comparing it to its historical volatility, Oversea Chinese Banking is 1.61 times less risky than MEBUKI FINANCIAL. It trades about 0.08 of its potential returns per unit of risk. MEBUKI FINANCIAL GROUP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 204.00 in MEBUKI FINANCIAL GROUP on August 28, 2024 and sell it today you would earn a total of 198.00 from holding MEBUKI FINANCIAL GROUP or generate 97.06% 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. MEBUKI FINANCIAL GROUP
Performance |
| Timeline |
| Oversea-Chinese BankingLimited |
| MEBUKI FINANCIAL |
Oversea-Chinese BankingLimited and MEBUKI FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oversea-Chinese BankingLimited and MEBUKI FINANCIAL
The main advantage of trading using opposite Oversea-Chinese BankingLimited and MEBUKI FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oversea-Chinese BankingLimited position performs unexpectedly, MEBUKI FINANCIAL 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 MEBUKI FINANCIAL will offset losses from the drop in MEBUKI FINANCIAL's long position.The idea behind Oversea Chinese Banking and MEBUKI FINANCIAL GROUP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| MEBUKI FINANCIAL vs. Deutsche Bank Aktiengesellschaft | MEBUKI FINANCIAL vs. Superior Plus Corp | MEBUKI FINANCIAL vs. NMI Holdings | MEBUKI FINANCIAL vs. Origin Agritech |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |