Correlation Between United Overseas and China Resources
Can any of the company-specific risk be diversified away by investing in both United Overseas and China Resources 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 United Overseas and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Overseas Bank and China Resources Land, you can compare the effects of market volatilities on United Overseas and China Resources 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 United Overseas with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and China Resources.
Diversification Opportunities for United Overseas and China Resources
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and China is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and United Overseas 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 United Overseas Bank are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of United Overseas i.e., United Overseas and China Resources go up and down completely randomly.
Pair Corralation between United Overseas and China Resources
Assuming the 90 days horizon United Overseas is expected to generate 3.06 times less return on investment than China Resources. But when comparing it to its historical volatility, United Overseas Bank is 3.55 times less risky than China Resources. It trades about 0.06 of its potential returns per unit of risk. China Resources Land is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 134.00 in China Resources Land on September 4, 2024 and sell it today you would earn a total of 144.00 from holding China Resources Land or generate 107.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Overseas Bank vs. China Resources Land
Performance |
| Timeline |
| United Overseas Bank |
| China Resources Land |
United Overseas and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and China Resources
The main advantage of trading using opposite United Overseas and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| United Overseas vs. Cleanaway Waste Management | United Overseas vs. INFORMATION SVC GRP | United Overseas vs. Ultra Clean Holdings | United Overseas vs. Mobilezone Holding AG |
| China Resources vs. Atrium Ljungberg AB | China Resources vs. RADIANCE HLDGS GRPHD 01 | China Resources vs. CIFI Holdings Co | China Resources vs. REDSUN PROPERTIES GROUP |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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