Correlation Between United Bank and Grand Investment

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

By analyzing existing cross correlation between The United Bank and Grand Investment Capital, you can compare the effects of market volatilities on United Bank and Grand Investment 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 Grand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Grand Investment.

Diversification Opportunities for United Bank and Grand Investment

0.04

Correlation Coefficient

United Bank  Grand Investment

Significant diversification

The 3 months correlation between United and Grand is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The United Bank and Grand Investment Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Investment Capital 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 The United Bank are associated (or correlated) with Grand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Investment Capital has no effect on the direction of United Bank i.e., United Bank and Grand Investment go up and down completely randomly.

Pair Corralation between United Bank and Grand Investment

Assuming the 90 days trading horizon United Bank is expected to generate 11.89 times less return on investment than Grand Investment. But when comparing it to its historical volatility, The United Bank is 30.14 times less risky than Grand Investment. It trades about 1.03 of its potential returns per unit of risk. Grand Investment Capital is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Grand Investment Capital on October 23, 2024 and sell it today you would earn a total of  199.00  from holding Grand Investment Capital or generate 21.04% return on investment over 90 days.

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

The United Bank  vs.  Grand Investment Capital

United Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The United Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, United Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Grand Investment Capital

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Investment Capital are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Grand Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Bank and Grand Investment

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

The idea behind The United Bank and Grand Investment Capital 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 CEOs Directory module to screen CEOs from public companies around the world.