Correlation Between UNITED BANK and GOLDEN GUINEA

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

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

Diversification Opportunities for UNITED BANK and GOLDEN GUINEA

0.43

Correlation Coefficient

UNITED BANK  GOLDEN GUINEA

Very weak diversification

The 3 months correlation between UNITED and GOLDEN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BANK FOR and GOLDEN GUINEA BREWERIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDEN GUINEA BREWERIES and UNITED 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 UNITED BANK FOR are associated (or correlated) with GOLDEN GUINEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDEN GUINEA BREWERIES has no effect on the direction of UNITED BANK i.e., UNITED BANK and GOLDEN GUINEA go up and down completely randomly.

Pair Corralation between UNITED BANK and GOLDEN GUINEA

Assuming the 90 days trading horizon UNITED BANK is expected to generate 4.86 times less return on investment than GOLDEN GUINEA. But when comparing it to its historical volatility, UNITED BANK FOR is 2.58 times less risky than GOLDEN GUINEA. It trades about 0.15 of its potential returns per unit of risk. GOLDEN GUINEA BREWERIES is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  370.00  in GOLDEN GUINEA BREWERIES on November 20, 2024 and sell it today you would earn a total of  339.00  from holding GOLDEN GUINEA BREWERIES or generate 91.62% return on investment over 90 days.

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

UNITED BANK FOR  vs.  GOLDEN GUINEA BREWERIES

UNITED BANK FOR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED BANK FOR are ranked lower than 11 (%) 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.

GOLDEN GUINEA BREWERIES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDEN GUINEA BREWERIES are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, GOLDEN GUINEA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITED BANK and GOLDEN GUINEA

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

The idea behind UNITED BANK FOR and GOLDEN GUINEA BREWERIES 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..