Correlation Between Union Bank and Converge Information

Can any of the company-specific risk be diversified away by investing in both Union Bank and Converge Information 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 Union Bank and Converge Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Union Bank of and Converge Information Communications, you can compare the effects of market volatilities on Union Bank and Converge Information 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 Union Bank with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Converge Information.

Diversification Opportunities for Union Bank and Converge Information

0.44

Correlation Coefficient

Union Bank  Converge Information

Very weak diversification

The 3 months correlation between Union and Converge is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and Union Bank 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 Union Bank of are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Union Bank i.e., Union Bank and Converge Information go up and down completely randomly.

Pair Corralation between Union Bank and Converge Information

Assuming the 90 days trading horizon Union Bank of is expected to generate 0.82 times more return on investment than Converge Information. However, Union Bank of is 1.22 times less risky than Converge Information. It trades about 0.03 of its potential returns per unit of risk. Converge Information Communications is currently generating about 0.01 per unit of risk. If you would invest  3,520  in Union Bank of on September 14, 2024 and sell it today you would earn a total of  100.00  from holding Union Bank of or generate 2.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Union Bank of  vs.  Converge Information Communica

Union Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Union Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Converge Information

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Converge Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Converge Information is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Union Bank and Converge Information

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

The idea behind Union Bank of and Converge Information Communications 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.