Correlation Between United Overseas and Bank Central
Can any of the company-specific risk be diversified away by investing in both United Overseas and Bank Central 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 Bank Central 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 Bank Central Asia, you can compare the effects of market volatilities on United Overseas and Bank Central 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 Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Bank Central.
Diversification Opportunities for United Overseas and Bank Central
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Bank is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of United Overseas i.e., United Overseas and Bank Central go up and down completely randomly.
Pair Corralation between United Overseas and Bank Central
Assuming the 90 days horizon United Overseas Bank is expected to generate 0.78 times more return on investment than Bank Central. However, United Overseas Bank is 1.29 times less risky than Bank Central. It trades about 0.06 of its potential returns per unit of risk. Bank Central Asia is currently generating about 0.03 per unit of risk. If you would invest 4,066 in United Overseas Bank on August 24, 2024 and sell it today you would earn a total of 1,338 from holding United Overseas Bank or generate 32.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Overseas Bank vs. Bank Central Asia
Performance |
| Timeline |
| United Overseas Bank |
| Bank Central Asia |
United Overseas and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Bank Central
The main advantage of trading using opposite United Overseas and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central's long position.| United Overseas vs. Invesco High Income | United Overseas vs. Blackrock Muniholdings Ny | United Overseas vs. MFS Investment Grade | United Overseas vs. Federated Premier Municipal |
| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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