Correlation Between United Overseas and Singapore Telecommunicatio

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Can any of the company-specific risk be diversified away by investing in both United Overseas and Singapore Telecommunicatio 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 Singapore Telecommunicatio 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 Singapore Telecommunications PK, you can compare the effects of market volatilities on United Overseas and Singapore Telecommunicatio 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 Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Singapore Telecommunicatio.

Diversification Opportunities for United Overseas and Singapore Telecommunicatio

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between United and Singapore is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of United Overseas i.e., United Overseas and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between United Overseas and Singapore Telecommunicatio

Assuming the 90 days horizon United Overseas Bank is expected to generate 0.95 times more return on investment than Singapore Telecommunicatio. However, United Overseas Bank is 1.06 times less risky than Singapore Telecommunicatio. It trades about 0.15 of its potential returns per unit of risk. Singapore Telecommunications PK is currently generating about -0.01 per unit of risk. If you would invest  4,862  in United Overseas Bank on September 5, 2024 and sell it today you would earn a total of  581.00  from holding United Overseas Bank or generate 11.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

United Overseas Bank  vs.  Singapore Telecommunications P

 Performance 
       Timeline  
United Overseas Bank 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
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 unfluctuating technical and fundamental indicators, United Overseas may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Singapore Telecommunicatio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Singapore Telecommunications PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Singapore Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United Overseas and Singapore Telecommunicatio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Overseas and Singapore Telecommunicatio

The main advantage of trading using opposite United Overseas and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.
The idea behind United Overseas Bank and Singapore Telecommunications PK 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.

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