Correlation Between UOL Group and City Developments
Can any of the company-specific risk be diversified away by investing in both UOL Group and City Developments 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 UOL Group and City Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UOL Group Ltd and City Developments Limited, you can compare the effects of market volatilities on UOL Group and City Developments 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 UOL Group with a short position of City Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of UOL Group and City Developments.
Diversification Opportunities for UOL Group and City Developments
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UOL and City is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding UOL Group Ltd and City Developments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and UOL Group 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 UOL Group Ltd are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of UOL Group i.e., UOL Group and City Developments go up and down completely randomly.
Pair Corralation between UOL Group and City Developments
Assuming the 90 days horizon UOL Group Ltd is expected to generate 0.74 times more return on investment than City Developments. However, UOL Group Ltd is 1.36 times less risky than City Developments. It trades about -0.02 of its potential returns per unit of risk. City Developments Limited is currently generating about -0.08 per unit of risk. If you would invest 1,859 in UOL Group Ltd on September 3, 2024 and sell it today you would lose (273.00) from holding UOL Group Ltd or give up 14.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 49.09% |
| Values | Daily Returns |
UOL Group Ltd vs. City Developments Limited
Performance |
| Timeline |
| UOL Group |
| City Developments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
UOL Group and City Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UOL Group and City Developments
The main advantage of trading using opposite UOL Group and City Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UOL Group position performs unexpectedly, City Developments 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 City Developments will offset losses from the drop in City Developments' long position.| UOL Group vs. City Developments | UOL Group vs. United Overseas Bank | UOL Group vs. Wilmar International | UOL Group vs. Singapore Exchange Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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