Correlation Between Union Bank and Bank of Kaohsiung
Can any of the company-specific risk be diversified away by investing in both Union Bank and Bank of Kaohsiung 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 Bank of Kaohsiung 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 Bank of Kaohsiung, you can compare the effects of market volatilities on Union Bank and Bank of Kaohsiung 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 Bank of Kaohsiung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Bank of Kaohsiung.
Diversification Opportunities for Union Bank and Bank of Kaohsiung
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Union and Bank is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Bank of Kaohsiung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Kaohsiung 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 Bank of Kaohsiung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Kaohsiung has no effect on the direction of Union Bank i.e., Union Bank and Bank of Kaohsiung go up and down completely randomly.
Pair Corralation between Union Bank and Bank of Kaohsiung
Assuming the 90 days trading horizon Union Bank of is expected to generate 1.21 times more return on investment than Bank of Kaohsiung. However, Union Bank is 1.21 times more volatile than Bank of Kaohsiung. It trades about 0.18 of its potential returns per unit of risk. Bank of Kaohsiung is currently generating about 0.0 per unit of risk. If you would invest 1,515 in Union Bank of on August 30, 2024 and sell it today you would earn a total of 45.00 from holding Union Bank of or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. Bank of Kaohsiung
Performance |
| Timeline |
| Union Bank |
| Bank of Kaohsiung |
Union Bank and Bank of Kaohsiung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and Bank of Kaohsiung
The main advantage of trading using opposite Union Bank and Bank of Kaohsiung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank position performs unexpectedly, Bank of Kaohsiung 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 of Kaohsiung will offset losses from the drop in Bank of Kaohsiung's long position.| Union Bank vs. Taiwan Business Bank | Union Bank vs. Chang Hwa Commercial | Union Bank vs. EnTie Commercial Bank | Union Bank vs. Bank of Kaohsiung |
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Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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