Correlation Between PSB Holdings and United Overseas
Can any of the company-specific risk be diversified away by investing in both PSB Holdings 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 PSB Holdings and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and United Overseas Bank, you can compare the effects of market volatilities on PSB Holdings 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 PSB Holdings with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and United Overseas.
Diversification Opportunities for PSB Holdings and United Overseas
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PSB and United is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings 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 PSB Holdings 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 PSB Holdings 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 PSB Holdings i.e., PSB Holdings and United Overseas go up and down completely randomly.
Pair Corralation between PSB Holdings and United Overseas
Given the investment horizon of 90 days PSB Holdings is expected to generate 1.08 times more return on investment than United Overseas. However, PSB Holdings is 1.08 times more volatile than United Overseas Bank. It trades about 0.06 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.05 per unit of risk. If you would invest 1,984 in PSB Holdings on January 13, 2025 and sell it today you would earn a total of 455.00 from holding PSB Holdings or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 63.71% |
| Values | Daily Returns |
PSB Holdings vs. United Overseas Bank
Performance |
| Timeline |
| PSB Holdings |
| United Overseas Bank |
PSB Holdings and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PSB Holdings and United Overseas
The main advantage of trading using opposite PSB Holdings and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings 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.| PSB Holdings vs. Flow Capital Corp | PSB Holdings vs. Blackhawk Growth Corp | PSB Holdings vs. Urbana | PSB Holdings vs. Princeton Capital |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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