Correlation Between UOL Group and China Overseas
Can any of the company-specific risk be diversified away by investing in both UOL Group and China 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 UOL Group and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UOL Group Ltd and China Overseas Land, you can compare the effects of market volatilities on UOL Group and China 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 UOL Group with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of UOL Group and China Overseas.
Diversification Opportunities for UOL Group and China Overseas
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UOL and China is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UOL Group Ltd and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and UOL Group 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 UOL Group Ltd are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of UOL Group i.e., UOL Group and China Overseas go up and down completely randomly.
Pair Corralation between UOL Group and China Overseas
Assuming the 90 days horizon UOL Group Ltd is expected to generate 0.47 times more return on investment than China Overseas. However, UOL Group Ltd is 2.12 times less risky than China Overseas. It trades about 0.01 of its potential returns per unit of risk. China Overseas Land is currently generating about -0.29 per unit of risk. If you would invest 1,653 in UOL Group Ltd on February 10, 2024 and sell it today you would earn a total of 3.00 from holding UOL Group Ltd or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UOL Group Ltd vs. China Overseas Land
Performance |
| Timeline |
| UOL Group |
| China Overseas Land |
UOL Group and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UOL Group and China Overseas
The main advantage of trading using opposite UOL Group and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UOL Group position performs unexpectedly, China 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 China Overseas will offset losses from the drop in China Overseas' long position.| UOL Group vs. City Developments | UOL Group vs. United Overseas Bank | UOL Group vs. Wilmar International | UOL Group vs. Singapore Exchange Ltd |
| China Overseas vs. Sun Hung Kai | China Overseas vs. China Overseas Land | China Overseas vs. EGRNF | China Overseas vs. Sino Land Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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