Correlation Between AFRICAN ALLIANCE and UNITED BANK

Can any of the company-specific risk be diversified away by investing in both AFRICAN ALLIANCE and UNITED 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 AFRICAN ALLIANCE and UNITED BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AFRICAN ALLIANCE INSURANCE and UNITED BANK FOR, you can compare the effects of market volatilities on AFRICAN ALLIANCE and UNITED 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 AFRICAN ALLIANCE with a short position of UNITED BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFRICAN ALLIANCE and UNITED BANK.

Diversification Opportunities for AFRICAN ALLIANCE and UNITED BANK

0.0

Correlation Coefficient

AFRICAN ALLIANCE  UNITED BANK

Pay attention - limited upside

The 3 months correlation between AFRICAN and UNITED is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AFRICAN ALLIANCE INSURANCE and UNITED BANK FOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED BANK FOR and AFRICAN ALLIANCE 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 AFRICAN ALLIANCE INSURANCE are associated (or correlated) with UNITED BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED BANK FOR has no effect on the direction of AFRICAN ALLIANCE i.e., AFRICAN ALLIANCE and UNITED BANK go up and down completely randomly.

Pair Corralation between AFRICAN ALLIANCE and UNITED BANK

If you would invest  845.00  in UNITED BANK FOR on October 25, 2024 and sell it today you would earn a total of  2,655  from holding UNITED BANK FOR or generate 314.2% return on investment over 90 days.

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

AFRICAN ALLIANCE INSURANCE  vs.  UNITED BANK FOR

AFRICAN ALLIANCE INS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFRICAN ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AFRICAN ALLIANCE is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

UNITED BANK FOR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED BANK FOR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, UNITED BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFRICAN ALLIANCE and UNITED BANK

The main advantage of trading using opposite AFRICAN ALLIANCE and UNITED BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFRICAN ALLIANCE position performs unexpectedly, UNITED 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 UNITED BANK will offset losses from the drop in UNITED BANK's long position.

The idea behind AFRICAN ALLIANCE INSURANCE and UNITED BANK FOR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.