Correlation Between OVERSEA CHINUNSPADR2 and FIRST SAVINGS
Can any of the company-specific risk be diversified away by investing in both OVERSEA CHINUNSPADR2 and FIRST 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 CHINUNSPADR2 and FIRST SAVINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OVERSEA CHINUNSPADR2 and FIRST SAVINGS FINL, you can compare the effects of market volatilities on OVERSEA CHINUNSPADR2 and FIRST 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 CHINUNSPADR2 with a short position of FIRST SAVINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of OVERSEA CHINUNSPADR2 and FIRST SAVINGS.
Diversification Opportunities for OVERSEA CHINUNSPADR2 and FIRST SAVINGS
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between OVERSEA and FIRST is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding OVERSEA CHINUNSPADR2 and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL and OVERSEA CHINUNSPADR2 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 CHINUNSPADR2 are associated (or correlated) with FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of OVERSEA CHINUNSPADR2 i.e., OVERSEA CHINUNSPADR2 and FIRST SAVINGS go up and down completely randomly.
Pair Corralation between OVERSEA CHINUNSPADR2 and FIRST SAVINGS
Assuming the 90 days trading horizon OVERSEA CHINUNSPADR2 is expected to generate 0.53 times more return on investment than FIRST SAVINGS. However, OVERSEA CHINUNSPADR2 is 1.88 times less risky than FIRST SAVINGS. It trades about 0.08 of its potential returns per unit of risk. FIRST SAVINGS FINL is currently generating about 0.04 per unit of risk. If you would invest 1,555 in OVERSEA CHINUNSPADR2 on October 26, 2024 and sell it today you would earn a total of 845.00 from holding OVERSEA CHINUNSPADR2 or generate 54.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OVERSEA CHINUNSPADR2 vs. FIRST SAVINGS FINL
Performance |
| Timeline |
| OVERSEA CHINUNSPADR2 |
| FIRST SAVINGS FINL |
OVERSEA CHINUNSPADR2 and FIRST SAVINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OVERSEA CHINUNSPADR2 and FIRST SAVINGS
The main advantage of trading using opposite OVERSEA CHINUNSPADR2 and FIRST SAVINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OVERSEA CHINUNSPADR2 position performs unexpectedly, FIRST 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 FIRST SAVINGS will offset losses from the drop in FIRST SAVINGS's long position.| OVERSEA CHINUNSPADR2 vs. Zoom Video Communications | OVERSEA CHINUNSPADR2 vs. TAL Education Group | OVERSEA CHINUNSPADR2 vs. CAREER EDUCATION | OVERSEA CHINUNSPADR2 vs. NAKED WINES PLC |
| FIRST SAVINGS vs. Yanzhou Coal Mining | FIRST SAVINGS vs. Air Transport Services | FIRST SAVINGS vs. ANGLO ASIAN MINING | FIRST SAVINGS vs. AMAG Austria Metall |
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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