Correlation Between UNITED BANK and ABC TRANSPORT

Can any of the company-specific risk be diversified away by investing in both UNITED BANK and ABC TRANSPORT 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 UNITED BANK and ABC TRANSPORT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNITED BANK FOR and ABC TRANSPORT PLC, you can compare the effects of market volatilities on UNITED BANK and ABC TRANSPORT 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 UNITED BANK with a short position of ABC TRANSPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED BANK and ABC TRANSPORT.

Diversification Opportunities for UNITED BANK and ABC TRANSPORT

0.73

Correlation Coefficient

UNITED BANK  ABC TRANSPORT

Poor diversification

The 3 months correlation between UNITED and ABC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BANK FOR and ABC TRANSPORT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC TRANSPORT PLC and UNITED 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 UNITED BANK FOR are associated (or correlated) with ABC TRANSPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC TRANSPORT PLC has no effect on the direction of UNITED BANK i.e., UNITED BANK and ABC TRANSPORT go up and down completely randomly.

Pair Corralation between UNITED BANK and ABC TRANSPORT

Assuming the 90 days trading horizon UNITED BANK FOR is expected to under-perform the ABC TRANSPORT. But the stock apears to be less risky and, when comparing its historical volatility, UNITED BANK FOR is 1.88 times less risky than ABC TRANSPORT. The stock trades about -0.2 of its potential returns per unit of risk. The ABC TRANSPORT PLC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  489.00  in ABC TRANSPORT PLC on August 4, 2025 and sell it today you would lose (65.00) from holding ABC TRANSPORT PLC or give up 13.29% of portfolio value over 90 days.

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

UNITED BANK FOR  vs.  ABC TRANSPORT PLC

UNITED BANK FOR

Risk-Adjusted Performance

Weakest

Over the last 90 days UNITED BANK FOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ABC TRANSPORT PLC

Risk-Adjusted Performance

Weakest

Over the last 90 days ABC TRANSPORT PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with UNITED BANK and ABC TRANSPORT

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

The idea behind UNITED BANK FOR and ABC TRANSPORT PLC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.