Correlation Between United Overseas and Standard Bank
Can any of the company-specific risk be diversified away by investing in both United Overseas and Standard Bank 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 Standard Bank 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 Standard Bank Group, you can compare the effects of market volatilities on United Overseas and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Standard Bank.
Diversification Opportunities for United Overseas and Standard Bank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Standard is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of United Overseas i.e., United Overseas and Standard Bank go up and down completely randomly.
Pair Corralation between United Overseas and Standard Bank
Assuming the 90 days horizon United Overseas is expected to generate 1.82 times less return on investment than Standard Bank. But when comparing it to its historical volatility, United Overseas Bank is 1.98 times less risky than Standard Bank. It trades about 0.06 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 854.00 in Standard Bank Group on August 24, 2024 and sell it today you would earn a total of 502.00 from holding Standard Bank Group or generate 58.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Overseas Bank vs. Standard Bank Group
Performance |
| Timeline |
| United Overseas Bank |
| Standard Bank Group |
United Overseas and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Standard Bank
The main advantage of trading using opposite United Overseas and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank'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 |
| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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