Correlation Between Prakash Steelage and Union Bank

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

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

Diversification Opportunities for Prakash Steelage and Union Bank

-0.14

Correlation Coefficient

Prakash Steelage  Union Bank

Good diversification

The 3 months correlation between Prakash and Union is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Prakash Steelage Limited and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank and Prakash Steelage 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 Prakash Steelage Limited are associated (or correlated) with Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Prakash Steelage i.e., Prakash Steelage and Union Bank go up and down completely randomly.

Pair Corralation between Prakash Steelage and Union Bank

Assuming the 90 days trading horizon Prakash Steelage Limited is expected to under-perform the Union Bank. But the stock apears to be less risky and, when comparing its historical volatility, Prakash Steelage Limited is 1.5 times less risky than Union Bank. The stock trades about -0.13 of its potential returns per unit of risk. The Union Bank of is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12,207  in Union Bank of on May 5, 2025 and sell it today you would earn a total of  603.00  from holding Union Bank of or generate 4.94% return on investment over 90 days.

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

Prakash Steelage Limited  vs.  Union Bank of

Prakash Steelage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prakash Steelage Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Union Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bank of are ranked lower than 3 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prakash Steelage and Union Bank

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

The idea behind Prakash Steelage Limited and Union Bank of 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.