Correlation Between United Utilities and DBS GROUP

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

By analyzing existing cross correlation between United Utilities Group and DBS GROUP HLDGS, you can compare the effects of market volatilities on United Utilities and DBS GROUP 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 Utilities with a short position of DBS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and DBS GROUP.

Diversification Opportunities for United Utilities and DBS GROUP

-0.24

Correlation Coefficient

United Utilities  DBS GROUP

Very good diversification

The 3 months correlation between United and DBS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and DBS GROUP HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS GROUP HLDGS and United Utilities 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 Utilities Group are associated (or correlated) with DBS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS GROUP HLDGS has no effect on the direction of United Utilities i.e., United Utilities and DBS GROUP go up and down completely randomly.

Pair Corralation between United Utilities and DBS GROUP

Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the DBS GROUP. In addition to that, United Utilities is 1.55 times more volatile than DBS GROUP HLDGS. It trades about -0.05 of its total potential returns per unit of risk. DBS GROUP HLDGS is currently generating about 0.04 per unit of volatility. If you would invest  3,077  in DBS GROUP HLDGS on December 21, 2024 and sell it today you would earn a total of  91.00  from holding DBS GROUP HLDGS or generate 2.96% return on investment over 90 days.

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

United Utilities Group  vs.  DBS GROUP HLDGS

United Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Utilities Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, United Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DBS GROUP HLDGS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DBS GROUP HLDGS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DBS GROUP is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Utilities and DBS GROUP

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

The idea behind United Utilities Group and DBS GROUP HLDGS 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.