Correlation Between UCO Bank and DiGiSPICE Technologies

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

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

Diversification Opportunities for UCO Bank and DiGiSPICE Technologies

0.85

Correlation Coefficient

UCO Bank  DiGiSPICE Technologies

Very poor diversification

The 3 months correlation between UCO and DiGiSPICE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding UCO Bank and DiGiSPICE Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiGiSPICE Technologies and UCO 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 UCO Bank are associated (or correlated) with DiGiSPICE Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiGiSPICE Technologies has no effect on the direction of UCO Bank i.e., UCO Bank and DiGiSPICE Technologies go up and down completely randomly.

Pair Corralation between UCO Bank and DiGiSPICE Technologies

Assuming the 90 days trading horizon UCO Bank is expected to under-perform the DiGiSPICE Technologies. But the stock apears to be less risky and, when comparing its historical volatility, UCO Bank is 1.7 times less risky than DiGiSPICE Technologies. The stock trades about -0.11 of its potential returns per unit of risk. The DiGiSPICE Technologies Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,735  in DiGiSPICE Technologies Limited on September 1, 2024 and sell it today you would lose (64.00) from holding DiGiSPICE Technologies Limited or give up 2.34% of portfolio value over 90 days.

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

UCO Bank  vs.  DiGiSPICE Technologies Limited

UCO Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UCO Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with UCO Bank and DiGiSPICE Technologies

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

The idea behind UCO Bank and DiGiSPICE Technologies Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.