Correlation Between UCO Bank and Generic Engineering

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

By analyzing existing cross correlation between UCO Bank and Generic Engineering Construction, you can compare the effects of market volatilities on UCO Bank and Generic Engineering 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 Generic Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCO Bank and Generic Engineering.

Diversification Opportunities for UCO Bank and Generic Engineering

0.86

Correlation Coefficient

UCO Bank  Generic Engineering

Very poor diversification

The 3 months correlation between UCO and Generic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding UCO Bank and Generic Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Engineering 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 Generic Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Engineering has no effect on the direction of UCO Bank i.e., UCO Bank and Generic Engineering go up and down completely randomly.

Pair Corralation between UCO Bank and Generic Engineering

Assuming the 90 days trading horizon UCO Bank is expected to generate 0.92 times more return on investment than Generic Engineering. However, UCO Bank is 1.09 times less risky than Generic Engineering. It trades about -0.08 of its potential returns per unit of risk. Generic Engineering Construction is currently generating about -0.15 per unit of risk. If you would invest  4,424  in UCO Bank on November 30, 2024 and sell it today you would lose (787.00) from holding UCO Bank or give up 17.79% 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.  Generic Engineering Constructi

UCO Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days UCO Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Generic Engineering

Risk-Adjusted Performance

Very Weak

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

Pair Trading with UCO Bank and Generic Engineering

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

The idea behind UCO Bank and Generic Engineering Construction 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.