Correlation Between Union Bank and First Abacus
Can any of the company-specific risk be diversified away by investing in both Union Bank and First Abacus 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 First Abacus 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 First Abacus Financial, you can compare the effects of market volatilities on Union Bank and First Abacus 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 First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and First Abacus.
Diversification Opportunities for Union Bank and First Abacus
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Union and First is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial 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 First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Union Bank i.e., Union Bank and First Abacus go up and down completely randomly.
Pair Corralation between Union Bank and First Abacus
Assuming the 90 days trading horizon Union Bank of is expected to under-perform the First Abacus. But the stock apears to be less risky and, when comparing its historical volatility, Union Bank of is 3.31 times less risky than First Abacus. The stock trades about -0.05 of its potential returns per unit of risk. The First Abacus Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 68.00 in First Abacus Financial on December 1, 2024 and sell it today you would lose (6.00) from holding First Abacus Financial or give up 8.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.46% |
| Values | Daily Returns |
Union Bank of vs. First Abacus Financial
Performance |
| Timeline |
| Union Bank |
| First Abacus Financial |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Union Bank and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and First Abacus
The main advantage of trading using opposite Union Bank and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.| Union Bank vs. Figaro Coffee Group | ||
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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