Correlation Between CHINA STATE and United Overseas

Can any of the company-specific risk be diversified away by investing in both CHINA STATE 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 CHINA STATE and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHINA STATE STRU and United Overseas Bank, you can compare the effects of market volatilities on CHINA STATE 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 CHINA STATE with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA STATE and United Overseas.

Diversification Opportunities for CHINA STATE and United Overseas

0.0

Correlation Coefficient

CHINA STATE  United Overseas

Pay attention - limited upside

The 3 months correlation between CHINA and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA STATE STRU 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 CHINA STATE 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 CHINA STATE STRU 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 CHINA STATE i.e., CHINA STATE and United Overseas go up and down completely randomly.

Pair Corralation between CHINA STATE and United Overseas

If you would invest  2,551  in United Overseas Bank on December 26, 2024 and sell it today you would earn a total of  69.00  from holding United Overseas Bank or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CHINA STATE STRU  vs.  United Overseas Bank

CHINA STATE STRU

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHINA STATE STRU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CHINA STATE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

United Overseas Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, United Overseas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHINA STATE and United Overseas

The main advantage of trading using opposite CHINA STATE and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA STATE 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.

The idea behind CHINA STATE STRU and United Overseas Bank 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.