Correlation Between Safe and United Overseas
Can any of the company-specific risk be diversified away by investing in both Safe 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 Safe and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safe and Green and United Overseas Bank, you can compare the effects of market volatilities on Safe 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 Safe with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe and United Overseas.
Diversification Opportunities for Safe and United Overseas
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Safe and United is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green 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 Safe 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 Safe and Green 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 Safe i.e., Safe and United Overseas go up and down completely randomly.
Pair Corralation between Safe and United Overseas
Considering the 90-day investment horizon Safe and Green is expected to generate 32.56 times more return on investment than United Overseas. However, Safe is 32.56 times more volatile than United Overseas Bank. It trades about 0.02 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.09 per unit of risk. If you would invest 13,200 in Safe and Green on August 31, 2024 and sell it today you would lose (12,959) from holding Safe and Green or give up 98.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.28% |
| Values | Daily Returns |
Safe and Green vs. United Overseas Bank
Performance |
| Timeline |
| Safe and Green |
| United Overseas Bank |
Safe and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safe and United Overseas
The main advantage of trading using opposite Safe and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe 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.The idea behind Safe and Green and United Overseas Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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