Correlation Between Standard Bank and United Overseas
Can any of the company-specific risk be diversified away by investing in both Standard Bank 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 Standard Bank and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and United Overseas Bank, you can compare the effects of market volatilities on Standard Bank 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 Standard Bank with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and United Overseas.
Diversification Opportunities for Standard Bank and United Overseas
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Standard and United is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group 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 Standard Bank 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 Standard Bank Group 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 Standard Bank i.e., Standard Bank and United Overseas go up and down completely randomly.
Pair Corralation between Standard Bank and United Overseas
Assuming the 90 days horizon Standard Bank Group is expected to under-perform the United Overseas. But the pink sheet apears to be less risky and, when comparing its historical volatility, Standard Bank Group is 1.32 times less risky than United Overseas. The pink sheet trades about -0.06 of its potential returns per unit of risk. The United Overseas Bank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,916 in United Overseas Bank on August 28, 2024 and sell it today you would earn a total of 485.00 from holding United Overseas Bank or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. United Overseas Bank
Performance |
| Timeline |
| Standard Bank Group |
| United Overseas Bank |
Standard Bank and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and United Overseas
The main advantage of trading using opposite Standard Bank and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank 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.| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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