Correlation Between City Union and Consolidated Construction
Can any of the company-specific risk be diversified away by investing in both City Union and Consolidated Construction 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 City Union and Consolidated Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Union Bank and Consolidated Construction Consortium, you can compare the effects of market volatilities on City Union and Consolidated Construction 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 City Union with a short position of Consolidated Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Union and Consolidated Construction.
Diversification Opportunities for City Union and Consolidated Construction
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between City and Consolidated is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding City Union Bank and Consolidated Construction Cons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Construction and City Union 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 City Union Bank are associated (or correlated) with Consolidated Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Construction has no effect on the direction of City Union i.e., City Union and Consolidated Construction go up and down completely randomly.
Pair Corralation between City Union and Consolidated Construction
Assuming the 90 days trading horizon City Union is expected to generate 29.2 times less return on investment than Consolidated Construction. But when comparing it to its historical volatility, City Union Bank is 30.83 times less risky than Consolidated Construction. It trades about 0.1 of its potential returns per unit of risk. Consolidated Construction Consortium is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Consolidated Construction Consortium on September 5, 2024 and sell it today you would earn a total of 1,712 from holding Consolidated Construction Consortium or generate 1141.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
City Union Bank vs. Consolidated Construction Cons
Performance |
| Timeline |
| City Union Bank |
| Consolidated Construction |
City Union and Consolidated Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Union and Consolidated Construction
The main advantage of trading using opposite City Union and Consolidated Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Union position performs unexpectedly, Consolidated Construction 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 Consolidated Construction will offset losses from the drop in Consolidated Construction's long position.| City Union vs. Hisar Metal Industries | City Union vs. Indraprastha Medical | City Union vs. Shyam Metalics and | City Union vs. Gujarat Lease Financing |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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