Correlation Between United Bank and Gatron Industries
Can any of the company-specific risk be diversified away by investing in both United Bank and Gatron Industries 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 United Bank and Gatron Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bank and Gatron Industries, you can compare the effects of market volatilities on United Bank and Gatron Industries 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 United Bank with a short position of Gatron Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Gatron Industries.
Diversification Opportunities for United Bank and Gatron Industries
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Gatron is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Bank and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries and United 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 United Bank are associated (or correlated) with Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of United Bank i.e., United Bank and Gatron Industries go up and down completely randomly.
Pair Corralation between United Bank and Gatron Industries
Assuming the 90 days trading horizon United Bank is expected to generate 1.91 times more return on investment than Gatron Industries. However, United Bank is 1.91 times more volatile than Gatron Industries. It trades about 0.32 of its potential returns per unit of risk. Gatron Industries is currently generating about 0.09 per unit of risk. If you would invest 31,570 in United Bank on September 14, 2024 and sell it today you would earn a total of 4,594 from holding United Bank or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bank vs. Gatron Industries
Performance |
| Timeline |
| United Bank |
| Gatron Industries |
United Bank and Gatron Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bank and Gatron Industries
The main advantage of trading using opposite United Bank and Gatron Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Gatron Industries 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 Gatron Industries will offset losses from the drop in Gatron Industries' long position.| United Bank vs. United Insurance | United Bank vs. Adamjee Insurance | United Bank vs. Shaheen Insurance | United Bank vs. Pakistan Tobacco |
| Gatron Industries vs. Adamjee Insurance | Gatron Industries vs. The Organic Meat | Gatron Industries vs. Askari General Insurance | Gatron Industries vs. Reliance Insurance Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |