Correlation Between UCO Bank and Advani Hotels

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

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

Diversification Opportunities for UCO Bank and Advani Hotels

0.87

Correlation Coefficient

UCO Bank  Advani Hotels

Very poor diversification

The 3 months correlation between UCO and Advani is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UCO Bank and Advani Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advani Hotels Resorts and UCO 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 UCO Bank are associated (or correlated) with Advani Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advani Hotels Resorts has no effect on the direction of UCO Bank i.e., UCO Bank and Advani Hotels go up and down completely randomly.

Pair Corralation between UCO Bank and Advani Hotels

Assuming the 90 days trading horizon UCO Bank is expected to generate 1.77 times less return on investment than Advani Hotels. But when comparing it to its historical volatility, UCO Bank is 2.22 times less risky than Advani Hotels. It trades about 0.06 of its potential returns per unit of risk. Advani Hotels Resorts is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,285  in Advani Hotels Resorts on September 1, 2024 and sell it today you would earn a total of  2,823  from holding Advani Hotels Resorts or generate 65.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.46%
Values	Daily Returns

UCO Bank  vs.  Advani Hotels Resorts

UCO Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UCO Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Advani Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advani Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with UCO Bank and Advani Hotels

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

The idea behind UCO Bank and Advani Hotels Resorts 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.