Correlation Between Indian Railway and City Union
Can any of the company-specific risk be diversified away by investing in both Indian Railway and City Union 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 Indian Railway and City Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indian Railway Catering and City Union Bank, you can compare the effects of market volatilities on Indian Railway 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 Indian Railway with a short position of City Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Railway and City Union.
Diversification Opportunities for Indian Railway and City Union
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indian and City is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Indian Railway Catering 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 Indian Railway 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 Indian Railway Catering 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 Indian Railway i.e., Indian Railway and City Union go up and down completely randomly.
Pair Corralation between Indian Railway and City Union
Assuming the 90 days trading horizon Indian Railway Catering is expected to under-perform the City Union. In addition to that, Indian Railway is 1.07 times more volatile than City Union Bank. It trades about -0.06 of its total potential returns per unit of risk. City Union Bank is currently generating about -0.04 per unit of volatility. If you would invest 17,459 in City Union Bank on October 25, 2024 and sell it today you would lose (250.00) from holding City Union Bank or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Railway Catering vs. City Union Bank
Performance |
| Timeline |
| Indian Railway Catering |
| City Union Bank |
Indian Railway and City Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Railway and City Union
The main advantage of trading using opposite Indian Railway and City Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Railway 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.| Indian Railway vs. Central Bank of | Indian Railway vs. Punjab National Bank | Indian Railway vs. ROUTE MOBILE LIMITED | Indian Railway vs. Tamilnadu Telecommunication Limited |
| City Union vs. State Bank of | City Union vs. Life Insurance | City Union vs. HDFC Bank Limited | City Union vs. ICICI Bank Limited |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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