Correlation Between State Bank and Union Bank

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

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

Diversification Opportunities for State Bank and Union Bank

0.79

Correlation Coefficient

State Bank  Union Bank

Poor diversification

The 3 months correlation between State and Union is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank and State Bank 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 State Bank of 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 State Bank i.e., State Bank and Union Bank go up and down completely randomly.

Pair Corralation between State Bank and Union Bank

Assuming the 90 days trading horizon State Bank of is expected to under-perform the Union Bank. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 2.06 times less risky than Union Bank. The stock trades about -0.24 of its potential returns per unit of risk. The Union Bank of is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11,388  in Union Bank of on December 6, 2024 and sell it today you would earn a total of  209.00  from holding Union Bank of or generate 1.84% return on investment over 90 days.

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

State Bank of  vs.  Union Bank of

State Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Union Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with State Bank and Union Bank

The main advantage of trading using opposite State Bank and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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 State Bank of 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.