Correlation Between DCB Bank and City Union
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By analyzing existing cross correlation between DCB Bank Limited and City Union Bank, you can compare the effects of market volatilities on DCB Bank and City Union 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 DCB Bank with a short position of City Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of DCB Bank and City Union.
Diversification Opportunities for DCB Bank and City Union
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DCB and City is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DCB Bank Limited and City Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Union Bank and DCB 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 DCB Bank Limited are associated (or correlated) with City Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Union Bank has no effect on the direction of DCB Bank i.e., DCB Bank and City Union go up and down completely randomly.
Pair Corralation between DCB Bank and City Union
Assuming the 90 days trading horizon DCB Bank is expected to generate 4.47 times less return on investment than City Union. But when comparing it to its historical volatility, DCB Bank Limited is 1.33 times less risky than City Union. It trades about 0.01 of its potential returns per unit of risk. City Union Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,038 in City Union Bank on September 2, 2024 and sell it today you would earn a total of 915.00 from holding City Union Bank or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
DCB Bank Limited vs. City Union Bank
Performance |
| Timeline |
| DCB Bank Limited |
| City Union Bank |
DCB Bank and City Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DCB Bank and City Union
The main advantage of trading using opposite DCB Bank and City Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DCB Bank position performs unexpectedly, City Union 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 City Union will offset losses from the drop in City Union's long position.The idea behind DCB Bank Limited and City Union Bank 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.| City Union vs. Reliance Industries Limited | City Union vs. State Bank of | City Union vs. Oil Natural Gas |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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