Correlation Between Singapore Technologies and United Overseas
Can any of the company-specific risk be diversified away by investing in both Singapore Technologies 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 Singapore Technologies and United Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Technologies Engineering and United Overseas Bank, you can compare the effects of market volatilities on Singapore Technologies 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 Singapore Technologies with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Technologies and United Overseas.
Diversification Opportunities for Singapore Technologies and United Overseas
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Singapore and United is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Technologies Enginee 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 Singapore Technologies 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 Singapore Technologies Engineering 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 Singapore Technologies i.e., Singapore Technologies and United Overseas go up and down completely randomly.
Pair Corralation between Singapore Technologies and United Overseas
Assuming the 90 days horizon Singapore Technologies Engineering is expected to under-perform the United Overseas. In addition to that, Singapore Technologies is 1.71 times more volatile than United Overseas Bank. It trades about -0.1 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.0 per unit of volatility. If you would invest 5,546 in United Overseas Bank on October 12, 2024 and sell it today you would lose (5.00) from holding United Overseas Bank or give up 0.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Singapore Technologies Enginee vs. United Overseas Bank
Performance |
Timeline |
Singapore Technologies |
United Overseas Bank |
Singapore Technologies and United Overseas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Singapore Technologies and United Overseas
The main advantage of trading using opposite Singapore Technologies and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Technologies 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.Singapore Technologies vs. Qinetiq Group PLC | Singapore Technologies vs. Rotork plc | Singapore Technologies vs. Singapore Technologies Engineering | Singapore Technologies vs. Leonardo SpA ADR |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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