Correlation Between Taylor Calvin and United Overseas

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

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

Diversification Opportunities for Taylor Calvin and United Overseas

-0.45

Correlation Coefficient

Taylor Calvin  United Overseas

Very good diversification

The 3 months correlation between Taylor and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Calvin B 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 Taylor Calvin 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 Taylor Calvin B 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 Taylor Calvin i.e., Taylor Calvin and United Overseas go up and down completely randomly.

Pair Corralation between Taylor Calvin and United Overseas

Given the investment horizon of 90 days Taylor Calvin B is expected to generate 2.52 times more return on investment than United Overseas. However, Taylor Calvin is 2.52 times more volatile than United Overseas Bank. It trades about 0.03 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  4,100  in Taylor Calvin B on September 26, 2024 and sell it today you would earn a total of  700.00  from holding Taylor Calvin B or generate 17.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.94%
Values	Daily Returns

Taylor Calvin B  vs.  United Overseas Bank

Taylor Calvin B

Risk-Adjusted Performance

0 of 100

Very Weak

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

United Overseas Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, United Overseas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taylor Calvin and United Overseas

The main advantage of trading using opposite Taylor Calvin and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Calvin 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 Taylor Calvin B 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.