Correlation Between United Overseas and Woodlands Financial
Can any of the company-specific risk be diversified away by investing in both United Overseas and Woodlands Financial 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 Woodlands Financial 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 Woodlands Financial Services, you can compare the effects of market volatilities on United Overseas and Woodlands Financial 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 Woodlands Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Woodlands Financial.
Diversification Opportunities for United Overseas and Woodlands Financial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Woodlands is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Woodlands Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodlands Financial 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 Woodlands Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodlands Financial has no effect on the direction of United Overseas i.e., United Overseas and Woodlands Financial go up and down completely randomly.
Pair Corralation between United Overseas and Woodlands Financial
Assuming the 90 days horizon United Overseas Bank is expected to generate 1.05 times more return on investment than Woodlands Financial. However, United Overseas is 1.05 times more volatile than Woodlands Financial Services. It trades about 0.25 of its potential returns per unit of risk. Woodlands Financial Services is currently generating about -0.09 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 485.00 from holding United Overseas Bank or generate 9.87% 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. Woodlands Financial Services
Performance |
| Timeline |
| United Overseas Bank |
| Woodlands Financial |
United Overseas and Woodlands Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Woodlands Financial
The main advantage of trading using opposite United Overseas and Woodlands Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Woodlands Financial 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 Woodlands Financial will offset losses from the drop in Woodlands Financial's long position.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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