Correlation Between UTI Asset and Punjab Sind

Can any of the company-specific risk be diversified away by investing in both UTI Asset and Punjab Sind 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 UTI Asset and Punjab Sind into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for UTI Asset and Punjab Sind

0.6

Correlation Coefficient

UTI Asset  Punjab Sind

Poor diversification

The 3 months correlation between UTI and Punjab is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding UTI Asset Management and Punjab Sind Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab Sind Bank and UTI Asset 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 UTI Asset Management are associated (or correlated) with Punjab Sind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab Sind Bank has no effect on the direction of UTI Asset i.e., UTI Asset and Punjab Sind go up and down completely randomly.

Pair Corralation between UTI Asset and Punjab Sind

Assuming the 90 days trading horizon UTI Asset Management is expected to generate 0.9 times more return on investment than Punjab Sind. However, UTI Asset Management is 1.11 times less risky than Punjab Sind. It trades about 0.05 of its potential returns per unit of risk. Punjab Sind Bank is currently generating about 0.01 per unit of risk. If you would invest  114,750  in UTI Asset Management on October 25, 2024 and sell it today you would earn a total of  8,265  from holding UTI Asset Management or generate 7.2% return on investment over 90 days.

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

UTI Asset Management  vs.  Punjab Sind Bank

UTI Asset Management

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UTI Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Punjab Sind Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Punjab Sind Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Punjab Sind is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UTI Asset and Punjab Sind

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

The idea behind UTI Asset Management and Punjab Sind 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.