Correlation Between OVERSEA CHINUNSPADR2 and Oversea Chinese
Can any of the company-specific risk be diversified away by investing in both OVERSEA CHINUNSPADR2 and Oversea Chinese 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 Oversea Chinese 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 CHINUNSPADR2 and Oversea Chinese 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 Oversea Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of OVERSEA CHINUNSPADR2 and Oversea Chinese.
Diversification Opportunities for OVERSEA CHINUNSPADR2 and Oversea Chinese
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OVERSEA and Oversea is 0.95. 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 Banking 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 Oversea Chinese. 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 Banking has no effect on the direction of OVERSEA CHINUNSPADR2 i.e., OVERSEA CHINUNSPADR2 and Oversea Chinese go up and down completely randomly.
Pair Corralation between OVERSEA CHINUNSPADR2 and Oversea Chinese
Assuming the 90 days trading horizon OVERSEA CHINUNSPADR2 is expected to generate 1.09 times less return on investment than Oversea Chinese. But when comparing it to its historical volatility, OVERSEA CHINUNSPADR2 is 1.32 times less risky than Oversea Chinese. It trades about 0.17 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,045 in Oversea Chinese Banking on October 31, 2024 and sell it today you would earn a total of 175.00 from holding Oversea Chinese Banking or generate 16.75% 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 CHINUNSPADR2 |
| Oversea Chinese Banking |
OVERSEA CHINUNSPADR2 and Oversea Chinese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OVERSEA CHINUNSPADR2 and Oversea Chinese
The main advantage of trading using opposite OVERSEA CHINUNSPADR2 and Oversea Chinese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OVERSEA CHINUNSPADR2 position performs unexpectedly, Oversea Chinese 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 will offset losses from the drop in Oversea Chinese's long position.| OVERSEA CHINUNSPADR2 vs. POSBO UNSPADRS20YC1 | OVERSEA CHINUNSPADR2 vs. Postal Savings Bank | OVERSEA CHINUNSPADR2 vs. Truist Financial | OVERSEA CHINUNSPADR2 vs. Oversea Chinese Banking |
| Oversea Chinese vs. POSBO UNSPADRS20YC1 | Oversea Chinese vs. Postal Savings Bank | Oversea Chinese vs. Truist Financial | Oversea Chinese vs. OVERSEA CHINUNSPADR2 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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