Correlation Between UOB Kay and Asset Five

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

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

Diversification Opportunities for UOB Kay and Asset Five

-0.46

Correlation Coefficient

UOB Kay  Asset Five

Very good diversification

The 3 months correlation between UOB and Asset is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding UOB Kay Hian and Asset Five Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Five Group and UOB Kay 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 UOB Kay Hian are associated (or correlated) with Asset Five. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Five Group has no effect on the direction of UOB Kay i.e., UOB Kay and Asset Five go up and down completely randomly.

Pair Corralation between UOB Kay and Asset Five

Assuming the 90 days trading horizon UOB Kay Hian is expected to generate 1.0 times more return on investment than Asset Five. However, UOB Kay is 1.0 times more volatile than Asset Five Group. It trades about 0.08 of its potential returns per unit of risk. Asset Five Group is currently generating about 0.07 per unit of risk. If you would invest  505.00  in UOB Kay Hian on October 13, 2024 and sell it today you would earn a total of  20.00  from holding UOB Kay Hian or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.3%
Values	Daily Returns

UOB Kay Hian  vs.  Asset Five Group

UOB Kay Hian

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UOB Kay Hian are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, UOB Kay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Asset Five Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asset Five Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Asset Five is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with UOB Kay and Asset Five

The main advantage of trading using opposite UOB Kay and Asset Five positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UOB Kay position performs unexpectedly, Asset Five 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 Asset Five will offset losses from the drop in Asset Five's long position.

The idea behind UOB Kay Hian and Asset Five Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.