Correlation Between UNITED BUS and ABC BANKING

Can any of the company-specific risk be diversified away by investing in both UNITED BUS and ABC BANKING 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 BUS and ABC BANKING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNITED BUS SERVICE and ABC BANKING PORATION, you can compare the effects of market volatilities on UNITED BUS and ABC BANKING 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 BUS with a short position of ABC BANKING. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED BUS and ABC BANKING.

Diversification Opportunities for UNITED BUS and ABC BANKING

0.0

Correlation Coefficient

UNITED BUS  ABC BANKING

Pay attention - limited upside

The 3 months correlation between UNITED and ABC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BUS SERVICE and ABC BANKING PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC BANKING PORATION and UNITED BUS 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 BUS SERVICE are associated (or correlated) with ABC BANKING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC BANKING PORATION has no effect on the direction of UNITED BUS i.e., UNITED BUS and ABC BANKING go up and down completely randomly.

Pair Corralation between UNITED BUS and ABC BANKING

If you would invest  4,160  in UNITED BUS SERVICE on September 5, 2024 and sell it today you would earn a total of  0.00  from holding UNITED BUS SERVICE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UNITED BUS SERVICE  vs.  ABC BANKING PORATION

UNITED BUS SERVICE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED BUS SERVICE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, UNITED BUS is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ABC BANKING PORATION

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ABC BANKING PORATION 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, ABC BANKING is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UNITED BUS and ABC BANKING

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

The idea behind UNITED BUS SERVICE and ABC BANKING PORATION 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..