Correlation Between VERISK ANLYTCS and United Overseas

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

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

Diversification Opportunities for VERISK ANLYTCS and United Overseas

0.9

Correlation Coefficient

VERISK ANLYTCS  United Overseas

Almost no diversification

The 3 months correlation between VERISK and United is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VERISK ANLYTCS A and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and VERISK ANLYTCS 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 VERISK ANLYTCS A are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of VERISK ANLYTCS i.e., VERISK ANLYTCS and United Overseas go up and down completely randomly.

Pair Corralation between VERISK ANLYTCS and United Overseas

Assuming the 90 days trading horizon VERISK ANLYTCS A is expected to under-perform the United Overseas. But the stock apears to be less risky and, when comparing its historical volatility, VERISK ANLYTCS A is 1.48 times less risky than United Overseas. The stock trades about -0.22 of its potential returns per unit of risk. The United Overseas Bank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,560  in United Overseas Bank on September 23, 2024 and sell it today you would earn a total of  12.00  from holding United Overseas Bank or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

VERISK ANLYTCS A  vs.  United Overseas Bank

VERISK ANLYTCS A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VERISK ANLYTCS A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VERISK ANLYTCS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United Overseas Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Overseas may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VERISK ANLYTCS and United Overseas

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

The idea behind VERISK ANLYTCS A and United Overseas Bank 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.