Correlation Between Retail Estates and Oversea-Chinese BankingLimited
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates 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 Retail Estates NV and Oversea Chinese Banking, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Oversea-Chinese BankingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Oversea-Chinese BankingLimited.
Diversification Opportunities for Retail Estates and Oversea-Chinese BankingLimited
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and Oversea-Chinese is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV 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 Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Oversea-Chinese BankingLimited go up and down completely randomly.
Pair Corralation between Retail Estates and Oversea-Chinese BankingLimited
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Oversea-Chinese BankingLimited. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.38 times less risky than Oversea-Chinese BankingLimited. The stock trades about -0.12 of its potential returns per unit of risk. The Oversea Chinese Banking is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Oversea Chinese Banking on September 3, 2024 and sell it today you would earn a total of 137.00 from holding Oversea Chinese Banking or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Oversea Chinese Banking
Performance |
| Timeline |
| Retail Estates NV |
| Oversea-Chinese BankingLimited |
Retail Estates and Oversea-Chinese BankingLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Oversea-Chinese BankingLimited
The main advantage of trading using opposite Retail Estates and Oversea-Chinese BankingLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Axway Software SA | Retail Estates vs. ATOSS SOFTWARE | Retail Estates vs. G8 EDUCATION | Retail Estates vs. American Public Education |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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