Correlation Between Union Bank and Kotak Mahindra

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

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

Diversification Opportunities for Union Bank and Kotak Mahindra

0.17

Correlation Coefficient

Union Bank  Kotak Mahindra

Average diversification

The 3 months correlation between Union and Kotak is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Kotak Mahindra Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kotak Mahindra Bank and Union 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 Union Bank of are associated (or correlated) with Kotak Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kotak Mahindra Bank has no effect on the direction of Union Bank i.e., Union Bank and Kotak Mahindra go up and down completely randomly.

Pair Corralation between Union Bank and Kotak Mahindra

Assuming the 90 days trading horizon Union Bank of is expected to generate 1.38 times more return on investment than Kotak Mahindra. However, Union Bank is 1.38 times more volatile than Kotak Mahindra Bank. It trades about 0.03 of its potential returns per unit of risk. Kotak Mahindra Bank is currently generating about -0.06 per unit of risk. If you would invest  12,262  in Union Bank of on September 19, 2024 and sell it today you would earn a total of  246.00  from holding Union Bank of or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Union Bank of  vs.  Kotak Mahindra Bank

Union Bank

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Union Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kotak Mahindra Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kotak Mahindra Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kotak Mahindra is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Union Bank and Kotak Mahindra

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

The idea behind Union Bank of and Kotak Mahindra Bank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.