Correlation Between United Overseas and Power Assets

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

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

Diversification Opportunities for United Overseas and Power Assets

0.0

Correlation Coefficient

United Overseas  Power Assets

Pay attention - limited upside

The 3 months correlation between United and Power is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and United Overseas 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 United Overseas Bank are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of United Overseas i.e., United Overseas and Power Assets go up and down completely randomly.

Pair Corralation between United Overseas and Power Assets

Assuming the 90 days horizon United Overseas Bank is expected to generate 0.97 times more return on investment than Power Assets. However, United Overseas Bank is 1.03 times less risky than Power Assets. It trades about 0.14 of its potential returns per unit of risk. Power Assets Holdings is currently generating about 0.07 per unit of risk. If you would invest  4,893  in United Overseas Bank on October 9, 2024 and sell it today you would earn a total of  537.00  from holding United Overseas Bank or generate 10.97% return on investment over 90 days.

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

United Overseas Bank  vs.  Power Assets Holdings

United Overseas Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 11 (%) 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.

Power Assets Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Power Assets Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Power Assets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Overseas and Power Assets

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

The idea behind United Overseas Bank and Power Assets Holdings 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.