Correlation Between Union Bank and AC Energy
Can any of the company-specific risk be diversified away by investing in both Union Bank and AC Energy 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 AC Energy 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 AC Energy Philippines, you can compare the effects of market volatilities on Union Bank and AC Energy 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 AC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and AC Energy.
Diversification Opportunities for Union Bank and AC Energy
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and ACEN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and AC Energy Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AC Energy Philippines 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 AC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AC Energy Philippines has no effect on the direction of Union Bank i.e., Union Bank and AC Energy go up and down completely randomly.
Pair Corralation between Union Bank and AC Energy
Assuming the 90 days trading horizon Union Bank of is expected to under-perform the AC Energy. But the stock apears to be less risky and, when comparing its historical volatility, Union Bank of is 1.2 times less risky than AC Energy. The stock trades about -0.03 of its potential returns per unit of risk. The AC Energy Philippines is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 416.00 in AC Energy Philippines on September 14, 2024 and sell it today you would lose (69.00) from holding AC Energy Philippines or give up 16.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. AC Energy Philippines
Performance |
| Timeline |
| Union Bank |
| AC Energy Philippines |
Union Bank and AC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and AC Energy
The main advantage of trading using opposite Union Bank and AC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank position performs unexpectedly, AC Energy 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 AC Energy will offset losses from the drop in AC Energy's long position.| Union Bank vs. SM Investments Corp | Union Bank vs. Alliance Select Foods | Union Bank vs. Philippine Savings Bank | Union Bank vs. Metro Retail Stores |
| AC Energy vs. Semirara Mining Corp | AC Energy vs. Top Frontier Investment | AC Energy vs. Apex Mining Co | AC Energy vs. Converge Information Communications |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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