Correlation Between OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited
Can any of the company-specific risk be diversified away by investing in both OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR2 and Oversea Chinese Banking, you can compare the effects of market volatilities on OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 with a short position of Oversea-Chinese BankingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited.
Diversification Opportunities for OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OVERSEA and Oversea-Chinese is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR/2 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 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 OVERSEA CHINUNSPADR/2 i.e., OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited go up and down completely randomly.
Pair Corralation between OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited
Assuming the 90 days trading horizon OVERSEA CHINUNSPADR2 is expected to generate 0.71 times more return on investment than Oversea-Chinese BankingLimited. However, OVERSEA CHINUNSPADR2 is 1.4 times less risky than Oversea-Chinese BankingLimited. It trades about 0.24 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.06 per unit of risk. If you would invest 2,340 in OVERSEA CHINUNSPADR2 on October 13, 2024 and sell it today you would earn a total of 120.00 from holding OVERSEA CHINUNSPADR2 or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OVERSEA CHINUNSPADR2 vs. Oversea Chinese Banking
Performance |
| Timeline |
| OVERSEA CHINUNSPADR/2 |
| Oversea-Chinese BankingLimited |
OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited
The main advantage of trading using opposite OVERSEA CHINUNSPADR/2 and Oversea-Chinese BankingLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OVERSEA CHINUNSPADR/2 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.| OVERSEA CHINUNSPADR/2 vs. Austevoll Seafood ASA | OVERSEA CHINUNSPADR/2 vs. Ebro Foods SA | OVERSEA CHINUNSPADR/2 vs. GWILLI FOOD | OVERSEA CHINUNSPADR/2 vs. Bio Techne Corp |
| Oversea-Chinese BankingLimited vs. Broadcom | Oversea-Chinese BankingLimited vs. Grupo Carso SAB | Oversea-Chinese BankingLimited vs. The Hanover Insurance | Oversea-Chinese BankingLimited vs. BROADWIND ENRGY |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |