Correlation Between United Overseas and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both United Overseas and BNP Paribas 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 BNP Paribas 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 BNP Paribas SA, you can compare the effects of market volatilities on United Overseas and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and BNP Paribas.
Diversification Opportunities for United Overseas and BNP Paribas
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and BNP is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of United Overseas i.e., United Overseas and BNP Paribas go up and down completely randomly.
Pair Corralation between United Overseas and BNP Paribas
Assuming the 90 days horizon United Overseas Bank is expected to generate 0.87 times more return on investment than BNP Paribas. However, United Overseas Bank is 1.14 times less risky than BNP Paribas. It trades about 0.24 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.39 per unit of risk. If you would invest 4,916 in United Overseas Bank on August 29, 2024 and sell it today you would earn a total of 467.00 from holding United Overseas Bank or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Overseas Bank vs. BNP Paribas SA
Performance |
| Timeline |
| United Overseas Bank |
| BNP Paribas SA |
United Overseas and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and BNP Paribas
The main advantage of trading using opposite United Overseas and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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