Correlation Between Singapore Technologies and United Overseas

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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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Singapore Technologies Enginee  vs.  United Overseas Bank

 Performance 
       Timeline  
Singapore Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Singapore Technologies Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
United Overseas Bank 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, United Overseas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.
The idea behind Singapore Technologies Engineering 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.
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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