Correlation Between ESUN Financial and Union Bank

Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Union Bank 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 ESUN Financial and Union Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ESUN Financial Holding and Union Bank of, you can compare the effects of market volatilities on ESUN Financial 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 ESUN Financial with a short position of Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Union Bank.

Diversification Opportunities for ESUN Financial and Union Bank

0.15

Correlation Coefficient

ESUN Financial  Union Bank

Average diversification

The 3 months correlation between ESUN and Union is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank and ESUN Financial 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 ESUN Financial Holding 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 ESUN Financial i.e., ESUN Financial and Union Bank go up and down completely randomly.

Pair Corralation between ESUN Financial and Union Bank

Assuming the 90 days trading horizon ESUN Financial Holding is expected to generate 0.97 times more return on investment than Union Bank. However, ESUN Financial Holding is 1.03 times less risky than Union Bank. It trades about 0.03 of its potential returns per unit of risk. Union Bank of is currently generating about 0.0 per unit of risk. If you would invest  2,393  in ESUN Financial Holding on September 19, 2024 and sell it today you would earn a total of  362.00  from holding ESUN Financial Holding or generate 15.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

ESUN Financial Holding  vs.  Union Bank of

ESUN Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESUN Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ESUN Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Union Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Union Bank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ESUN Financial and Union Bank

The main advantage of trading using opposite ESUN Financial and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial 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.

The idea behind ESUN Financial Holding and Union Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.