Correlation Between Union Chemicals and Union Bank
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By analyzing existing cross correlation between Union Chemicals Lanka and Union Bank, you can compare the effects of market volatilities on Union Chemicals and Union Bank 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 Chemicals with a short position of Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Chemicals and Union Bank.
Diversification Opportunities for Union Chemicals and Union Bank
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and Union is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Union Chemicals Lanka and Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank and Union Chemicals 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 Chemicals Lanka are associated (or correlated) with Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Union Chemicals i.e., Union Chemicals and Union Bank go up and down completely randomly.
Pair Corralation between Union Chemicals and Union Bank
Assuming the 90 days trading horizon Union Chemicals Lanka is expected to generate 0.9 times more return on investment than Union Bank. However, Union Chemicals Lanka is 1.11 times less risky than Union Bank. It trades about 0.1 of its potential returns per unit of risk. Union Bank is currently generating about 0.06 per unit of risk. If you would invest 67,000 in Union Chemicals Lanka on August 27, 2024 and sell it today you would earn a total of 2,975 from holding Union Chemicals Lanka or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Union Chemicals Lanka vs. Union Bank
Performance |
| Timeline |
| Union Chemicals Lanka |
| Union Bank |
Union Chemicals and Union Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Chemicals and Union Bank
The main advantage of trading using opposite Union Chemicals and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Chemicals position performs unexpectedly, Union Bank 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 Union Bank will offset losses from the drop in Union Bank's long position.| Union Chemicals vs. Ceylinco Insurance PLC | Union Chemicals vs. Singhe Hospitals | Union Chemicals vs. Lanka Realty Investments | Union Chemicals vs. RENUKA FOODS PLC |
| Union Bank vs. Ceylinco Insurance PLC | Union Bank vs. Renuka Agri Foods | Union Bank vs. RENUKA FOODS PLC | Union Bank vs. Softlogic Life Insurance |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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