Correlation Between Union Bank and Oracle Financial

Can any of the company-specific risk be diversified away by investing in both Union Bank and Oracle Financial 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 Oracle Financial 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 Oracle Financial Services, you can compare the effects of market volatilities on Union Bank and Oracle Financial 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 Oracle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Oracle Financial.

Diversification Opportunities for Union Bank and Oracle Financial

0.68

Correlation Coefficient

Union Bank  Oracle Financial

Poor diversification

The 3 months correlation between Union and Oracle is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Oracle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle Financial Services 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 Oracle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle Financial Services has no effect on the direction of Union Bank i.e., Union Bank and Oracle Financial go up and down completely randomly.

Pair Corralation between Union Bank and Oracle Financial

Assuming the 90 days trading horizon Union Bank of is expected to generate 1.01 times more return on investment than Oracle Financial. However, Union Bank is 1.01 times more volatile than Oracle Financial Services. It trades about 0.01 of its potential returns per unit of risk. Oracle Financial Services is currently generating about -0.06 per unit of risk. If you would invest  11,027  in Union Bank of on October 24, 2024 and sell it today you would lose (74.00) from holding Union Bank of or give up 0.67% of portfolio value over 90 days.

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

Union Bank of  vs.  Oracle Financial Services

Union Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oracle Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oracle Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Union Bank and Oracle Financial

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

The idea behind Union Bank of and Oracle Financial Services 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.