Correlation Between Superior Plus and Oversea Chinese

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Oversea Chinese 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 Superior Plus and Oversea Chinese into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Oversea Chinese Banking, you can compare the effects of market volatilities on Superior Plus and Oversea Chinese 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 Superior Plus with a short position of Oversea Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Oversea Chinese.

Diversification Opportunities for Superior Plus and Oversea Chinese

-0.64

Correlation Coefficient

Superior Plus  Oversea Chinese

Excellent diversification

The 3 months correlation between Superior and Oversea is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea Chinese Banking and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Oversea Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea Chinese Banking has no effect on the direction of Superior Plus i.e., Superior Plus and Oversea Chinese go up and down completely randomly.

Pair Corralation between Superior Plus and Oversea Chinese

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Oversea Chinese. In addition to that, Superior Plus is 2.58 times more volatile than Oversea Chinese Banking. It trades about -0.03 of its total potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.13 per unit of volatility. If you would invest  1,048  in Oversea Chinese Banking on September 14, 2024 and sell it today you would earn a total of  117.00  from holding Oversea Chinese Banking or generate 11.16% return on investment over 90 days.

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

Superior Plus Corp  vs.  Oversea Chinese Banking

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oversea Chinese Banking

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oversea Chinese Banking are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Oversea Chinese may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Superior Plus and Oversea Chinese

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

The idea behind Superior Plus Corp and Oversea Chinese Banking 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.