Correlation Between Dimet Public and UOB Kay

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

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

Diversification Opportunities for Dimet Public and UOB Kay

-0.28

Correlation Coefficient

Dimet Public  UOB Kay

Very good diversification

The 3 months correlation between Dimet and UOB is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dimet Public 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 Dimet Public 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 Dimet Public 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 Dimet Public i.e., Dimet Public and UOB Kay go up and down completely randomly.

Pair Corralation between Dimet Public and UOB Kay

Assuming the 90 days trading horizon Dimet Public is expected to under-perform the UOB Kay. In addition to that, Dimet Public is 1.45 times more volatile than UOB Kay Hian. It trades about 0.0 of its total potential returns per unit of risk. UOB Kay Hian is currently generating about 0.05 per unit of volatility. If you would invest  500.00  in UOB Kay Hian on October 26, 2024 and sell it today you would earn a total of  30.00  from holding UOB Kay Hian or generate 6.0% return on investment over 90 days.

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

Dimet Public  vs.  UOB Kay Hian

Dimet Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

UOB Kay Hian

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UOB Kay Hian are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, UOB Kay may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dimet Public and UOB Kay

The main advantage of trading using opposite Dimet Public and UOB Kay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimet Public 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 Dimet Public 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.