Correlation Between Union Bank and Refex Industries

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

Diversification Opportunities for Union Bank and Refex Industries

0.66

Correlation Coefficient

Union Bank  Refex Industries

Poor diversification

The 3 months correlation between Union and Refex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and Refex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refex Industries 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 Refex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refex Industries has no effect on the direction of Union Bank i.e., Union Bank and Refex Industries go up and down completely randomly.

Pair Corralation between Union Bank and Refex Industries

Assuming the 90 days trading horizon Union Bank of is expected to generate 0.81 times more return on investment than Refex Industries. However, Union Bank of is 1.24 times less risky than Refex Industries. It trades about 0.09 of its potential returns per unit of risk. Refex Industries Limited is currently generating about -0.04 per unit of risk. If you would invest  11,456  in Union Bank of on October 8, 2024 and sell it today you would earn a total of  950.00  from holding Union Bank of or generate 8.29% return on investment over 90 days.

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

Union Bank of  vs.  Refex Industries Limited

Union Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Union Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Refex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Refex Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Union Bank and Refex Industries

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

The idea behind Union Bank of and Refex Industries 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.