Correlation Between United Overseas and Wilmar International
Can any of the company-specific risk be diversified away by investing in both United Overseas and Wilmar International 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 Wilmar International 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 Wilmar International, you can compare the effects of market volatilities on United Overseas and Wilmar International 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 Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Wilmar International.
Diversification Opportunities for United Overseas and Wilmar International
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Wilmar is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of United Overseas i.e., United Overseas and Wilmar International go up and down completely randomly.
Pair Corralation between United Overseas and Wilmar International
Assuming the 90 days horizon United Overseas Bank is expected to generate 0.56 times more return on investment than Wilmar International. However, United Overseas Bank is 1.8 times less risky than Wilmar International. It trades about 0.15 of its potential returns per unit of risk. Wilmar International is currently generating about -0.03 per unit of risk. If you would invest 4,846 in United Overseas Bank on August 31, 2024 and sell it today you would earn a total of 588.00 from holding United Overseas Bank or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Overseas Bank vs. Wilmar International
Performance |
| Timeline |
| United Overseas Bank |
| Wilmar International |
United Overseas and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Wilmar International
The main advantage of trading using opposite United Overseas and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Wilmar International 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 Wilmar International will offset losses from the drop in Wilmar International'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 |
| Wilmar International vs. Wilmar International Limited | Wilmar International vs. Wesfarmers Ltd ADR | Wilmar International vs. United Overseas Bank | Wilmar International vs. Kerry Group PLC |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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