Correlation Between Mangalam Organics and Union Bank

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

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

Diversification Opportunities for Mangalam Organics and Union Bank

-0.65

Correlation Coefficient

Mangalam Organics  Union Bank

Excellent diversification

The 3 months correlation between Mangalam and Union is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mangalam Organics Limited and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank and Mangalam Organics 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 Mangalam Organics Limited 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 Mangalam Organics i.e., Mangalam Organics and Union Bank go up and down completely randomly.

Pair Corralation between Mangalam Organics and Union Bank

Assuming the 90 days trading horizon Mangalam Organics Limited is expected to under-perform the Union Bank. In addition to that, Mangalam Organics is 1.42 times more volatile than Union Bank of. It trades about -0.1 of its total potential returns per unit of risk. Union Bank of is currently generating about 0.09 per unit of volatility. If you would invest  11,404  in Union Bank of on October 6, 2024 and sell it today you would earn a total of  1,002  from holding Union Bank of or generate 8.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mangalam Organics Limited  vs.  Union Bank of

Mangalam Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Organics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Union Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Union Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mangalam Organics and Union Bank

The main advantage of trading using opposite Mangalam Organics and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mangalam Organics 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 Mangalam Organics Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.