Correlation Between Waste Management and United Overseas
Can any of the company-specific risk be diversified away by investing in both Waste Management and United Overseas 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 Waste Management and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and United Overseas Bank, you can compare the effects of market volatilities on Waste Management and United Overseas 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 Waste Management with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and United Overseas.
Diversification Opportunities for Waste Management and United Overseas
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Waste and United is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and Waste Management 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 Waste Management are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Waste Management i.e., Waste Management and United Overseas go up and down completely randomly.
Pair Corralation between Waste Management and United Overseas
Assuming the 90 days trading horizon Waste Management is expected to generate 1.01 times less return on investment than United Overseas. But when comparing it to its historical volatility, Waste Management is 1.34 times less risky than United Overseas. It trades about 0.24 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,209 in United Overseas Bank on September 3, 2024 and sell it today you would earn a total of 317.00 from holding United Overseas Bank or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. United Overseas Bank
Performance |
| Timeline |
| Waste Management |
| United Overseas Bank |
Waste Management and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and United Overseas
The main advantage of trading using opposite Waste Management and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' long position.| Waste Management vs. ANTA SPORTS PRODUCT | Waste Management vs. Gaztransport Technigaz SA | Waste Management vs. SCIENCE IN SPORT | Waste Management vs. SPORTING |
| United Overseas vs. Waste Management | United Overseas vs. Bumrungrad Hospital Public | United Overseas vs. American Eagle Outfitters | United Overseas vs. Jacquet Metal Service |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |