Correlation Between DBS Group and United Overseas
Can any of the company-specific risk be diversified away by investing in both DBS Group 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 DBS Group and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and United Overseas Bank, you can compare the effects of market volatilities on DBS Group 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 DBS Group with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and United Overseas.
Diversification Opportunities for DBS Group and United Overseas
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DBS and United is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings 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 DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and United Overseas go up and down completely randomly.
Pair Corralation between DBS Group and United Overseas
Assuming the 90 days trading horizon DBS Group Holdings is expected to generate 0.99 times more return on investment than United Overseas. However, DBS Group Holdings is 1.01 times less risky than United Overseas. It trades about 0.09 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.06 per unit of risk. If you would invest 1,837 in DBS Group Holdings on September 23, 2024 and sell it today you would earn a total of 1,193 from holding DBS Group Holdings or generate 64.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
DBS Group Holdings vs. United Overseas Bank
Performance |
Timeline |
DBS Group Holdings |
United Overseas Bank |
DBS Group and United Overseas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DBS Group and United Overseas
The main advantage of trading using opposite DBS Group and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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.DBS Group vs. China Merchants Bank | DBS Group vs. HDFC Bank Limited | DBS Group vs. ICICI Bank Limited | DBS Group vs. PT Bank Central |
United Overseas vs. China Merchants Bank | United Overseas vs. HDFC Bank Limited | United Overseas vs. ICICI Bank Limited | United Overseas vs. PT Bank Central |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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