Correlation Between BANPU POWER and UOB Kay

Can any of the company-specific risk be diversified away by investing in both BANPU POWER and UOB Kay 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 BANPU POWER and UOB Kay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANPU POWER and UOB Kay Hian, you can compare the effects of market volatilities on BANPU POWER and UOB Kay 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 BANPU POWER with a short position of UOB Kay. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANPU POWER and UOB Kay.

Diversification Opportunities for BANPU POWER and UOB Kay

-0.46

Correlation Coefficient

BANPU POWER  UOB Kay

Very good diversification

The 3 months correlation between BANPU and UOB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BANPU POWER and UOB Kay Hian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOB Kay Hian and BANPU POWER 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 BANPU POWER are associated (or correlated) with UOB Kay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UOB Kay Hian has no effect on the direction of BANPU POWER i.e., BANPU POWER and UOB Kay go up and down completely randomly.

Pair Corralation between BANPU POWER and UOB Kay

Assuming the 90 days trading horizon BANPU POWER is expected to under-perform the UOB Kay. But the stock apears to be less risky and, when comparing its historical volatility, BANPU POWER is 38.4 times less risky than UOB Kay. The stock trades about -0.04 of its potential returns per unit of risk. The UOB Kay Hian is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  502.00  in UOB Kay Hian on September 23, 2024 and sell it today you would earn a total of  28.00  from holding UOB Kay Hian or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BANPU POWER  vs.  UOB Kay Hian

BANPU POWER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANPU POWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

UOB Kay Hian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UOB Kay Hian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, UOB Kay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BANPU POWER and UOB Kay

The main advantage of trading using opposite BANPU POWER and UOB Kay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANPU POWER position performs unexpectedly, UOB Kay 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 UOB Kay will offset losses from the drop in UOB Kay's long position.

The idea behind BANPU POWER and UOB Kay Hian pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.