Correlation Between City Union and Silver Touch

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

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

Diversification Opportunities for City Union and Silver Touch

-0.32

Correlation Coefficient

City Union  Silver Touch

Very good diversification

The 3 months correlation between City and Silver is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding City Union Bank and Silver Touch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Touch Technologies and City Union 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 City Union Bank are associated (or correlated) with Silver Touch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Touch Technologies has no effect on the direction of City Union i.e., City Union and Silver Touch go up and down completely randomly.

Pair Corralation between City Union and Silver Touch

Assuming the 90 days trading horizon City Union Bank is expected to under-perform the Silver Touch. But the stock apears to be less risky and, when comparing its historical volatility, City Union Bank is 1.11 times less risky than Silver Touch. The stock trades about -0.12 of its potential returns per unit of risk. The Silver Touch Technologies is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  67,990  in Silver Touch Technologies on October 20, 2024 and sell it today you would lose (2,405) from holding Silver Touch Technologies or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

City Union Bank  vs.  Silver Touch Technologies

City Union Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in City Union Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, City Union exhibited solid returns over the last few months and may actually be approaching a breakup point.

Silver Touch Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Touch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with City Union and Silver Touch

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

The idea behind City Union Bank and Silver Touch Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.