Correlation Between Union Bank and Premiere Entertainment
Can any of the company-specific risk be diversified away by investing in both Union Bank and Premiere Entertainment 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 Premiere Entertainment 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 Premiere Entertainment, you can compare the effects of market volatilities on Union Bank and Premiere Entertainment 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 Premiere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Premiere Entertainment.
Diversification Opportunities for Union Bank and Premiere Entertainment
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Premiere is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment 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 Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of Union Bank i.e., Union Bank and Premiere Entertainment go up and down completely randomly.
Pair Corralation between Union Bank and Premiere Entertainment
Assuming the 90 days trading horizon Union Bank of is expected to under-perform the Premiere Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Union Bank of is 1.88 times less risky than Premiere Entertainment. The stock trades about -0.16 of its potential returns per unit of risk. The Premiere Entertainment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Premiere Entertainment on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Premiere Entertainment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. Premiere Entertainment
Performance |
| Timeline |
| Union Bank |
| Premiere Entertainment |
Union Bank and Premiere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and Premiere Entertainment
The main advantage of trading using opposite Union Bank and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank position performs unexpectedly, Premiere Entertainment 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 Premiere Entertainment will offset losses from the drop in Premiere Entertainment's long position.| Union Bank vs. Apex Mining Co | Union Bank vs. Suntrust Home Developers | Union Bank vs. SM Investments Corp | Union Bank vs. Philex Mining Corp |
| Premiere Entertainment vs. Concepcion Industrial Corp | Premiere Entertainment vs. Atlas Consolidated Mining | Premiere Entertainment vs. Sun Life Financial | Premiere Entertainment vs. Figaro Coffee Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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