Correlation Between Asia Plus and UOB Kay

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

By analyzing existing cross correlation between Asia Plus Group and UOB Kay Hian, you can compare the effects of market volatilities on Asia Plus and UOB Kay 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 Asia Plus with a short position of UOB Kay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Plus and UOB Kay.

Diversification Opportunities for Asia Plus and UOB Kay

0.43

Correlation Coefficient

Asia Plus  UOB Kay

Very weak diversification

The 3 months correlation between Asia and UOB is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and UOB Kay Hian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOB Kay Hian and Asia 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 Asia Plus Group are associated (or correlated) with UOB Kay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UOB Kay Hian has no effect on the direction of Asia Plus i.e., Asia Plus and UOB Kay go up and down completely randomly.

Pair Corralation between Asia Plus and UOB Kay

Assuming the 90 days trading horizon Asia Plus Group is expected to under-perform the UOB Kay. But the stock apears to be less risky and, when comparing its historical volatility, Asia Plus Group is 50.63 times less risky than UOB Kay. The stock trades about -0.01 of its potential returns per unit of risk. The UOB Kay Hian is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  506.00  in UOB Kay Hian on September 12, 2024 and sell it today you would earn a total of  24.00  from holding UOB Kay Hian or generate 4.74% return on investment over 90 days.

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

Asia Plus Group  vs.  UOB Kay Hian

Asia Plus Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Plus Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Asia Plus is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

UOB Kay Hian

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UOB Kay Hian are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, UOB Kay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asia Plus and UOB Kay

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

The idea behind Asia Plus Group and UOB Kay Hian 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.