Correlation Between United Overseas and Bank Hapoalim

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

Diversification Opportunities for United Overseas and Bank Hapoalim

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between United and Bank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Bank Hapoalim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim 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 Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim has no effect on the direction of United Overseas i.e., United Overseas and Bank Hapoalim go up and down completely randomly.

Pair Corralation between United Overseas and Bank Hapoalim

Assuming the 90 days horizon United Overseas is expected to generate 10.89 times less return on investment than Bank Hapoalim. But when comparing it to its historical volatility, United Overseas Bank is 1.7 times less risky than Bank Hapoalim. It trades about 0.0 of its potential returns per unit of risk. Bank Hapoalim is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  295,239  in Bank Hapoalim on December 19, 2023 and sell it today you would earn a total of  36,961  from holding Bank Hapoalim or generate 12.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy78.79%
ValuesDaily Returns

United Overseas Bank  vs.  Bank Hapoalim

 Performance 
       Timeline  
United Overseas Bank 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, United Overseas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Bank Hapoalim 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Hapoalim are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Hapoalim may actually be approaching a critical reversion point that can send shares even higher in April 2024.

United Overseas and Bank Hapoalim Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Overseas and Bank Hapoalim

The main advantage of trading using opposite United Overseas and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Bank Hapoalim 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 Bank Hapoalim will offset losses from the drop in Bank Hapoalim's long position.
The idea behind United Overseas Bank and Bank Hapoalim 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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