Correlation Between CUSTODIAN INVESTMENT and UNITY BANK

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

By analyzing existing cross correlation between CUSTODIAN INVESTMENT PLC and UNITY BANK PLC, you can compare the effects of market volatilities on CUSTODIAN INVESTMENT and UNITY 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 CUSTODIAN INVESTMENT with a short position of UNITY BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CUSTODIAN INVESTMENT and UNITY BANK.

Diversification Opportunities for CUSTODIAN INVESTMENT and UNITY BANK

0.0

Correlation Coefficient

CUSTODIAN INVESTMENT  UNITY BANK

Pay attention - limited upside

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

Pair Corralation between CUSTODIAN INVESTMENT and UNITY BANK

Assuming the 90 days trading horizon CUSTODIAN INVESTMENT is expected to generate 1.13 times less return on investment than UNITY BANK. But when comparing it to its historical volatility, CUSTODIAN INVESTMENT PLC is 1.59 times less risky than UNITY BANK. It trades about 0.09 of its potential returns per unit of risk. UNITY BANK PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  58.00  in UNITY BANK PLC on October 11, 2024 and sell it today you would earn a total of  93.00  from holding UNITY BANK PLC or generate 160.34% return on investment over 90 days.

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

CUSTODIAN INVESTMENT PLC  vs.  UNITY BANK PLC

CUSTODIAN INVESTMENT PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CUSTODIAN INVESTMENT PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, CUSTODIAN INVESTMENT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

UNITY BANK PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITY BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, UNITY BANK is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CUSTODIAN INVESTMENT and UNITY BANK

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

The idea behind CUSTODIAN INVESTMENT PLC and UNITY BANK PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.