Correlation Between Bank Central and United Overseas
Can any of the company-specific risk be diversified away by investing in both Bank Central and United Overseas 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 Bank Central and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and United Overseas Bank, you can compare the effects of market volatilities on Bank Central and United Overseas 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 Bank Central with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and United Overseas.
Diversification Opportunities for Bank Central and United Overseas
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and Bank Central 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 Bank Central Asia are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Bank Central i.e., Bank Central and United Overseas go up and down completely randomly.
Pair Corralation between Bank Central and United Overseas
Assuming the 90 days horizon Bank Central is expected to generate 2.46 times less return on investment than United Overseas. In addition to that, Bank Central is 1.36 times more volatile than United Overseas Bank. It trades about 0.02 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.06 per unit of volatility. If you would invest 4,080 in United Overseas Bank on October 21, 2024 and sell it today you would earn a total of 1,370 from holding United Overseas Bank or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. United Overseas Bank
Performance |
| Timeline |
| Bank Central Asia |
| United Overseas Bank |
Bank Central and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and United Overseas
The main advantage of trading using opposite Bank Central and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' long position.| Bank Central vs. The Farmers Bank | Bank Central vs. CCSB Financial Corp | Bank Central vs. Bank of Utica | Bank Central vs. Delhi Bank Corp |
| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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