Correlation Between City Union and CSB Bank

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

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

Diversification Opportunities for City Union and CSB Bank

0.82

Correlation Coefficient

City Union  CSB Bank

Very poor diversification

The 3 months correlation between City and CSB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding City Union Bank and CSB Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSB Bank Limited and City Union 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 City Union Bank are associated (or correlated) with CSB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSB Bank Limited has no effect on the direction of City Union i.e., City Union and CSB Bank go up and down completely randomly.

Pair Corralation between City Union and CSB Bank

Assuming the 90 days trading horizon City Union Bank is expected to generate 1.35 times more return on investment than CSB Bank. However, City Union is 1.35 times more volatile than CSB Bank Limited. It trades about 0.13 of its potential returns per unit of risk. CSB Bank Limited is currently generating about 0.18 per unit of risk. If you would invest  18,113  in City Union Bank on April 24, 2025 and sell it today you would earn a total of  3,019  from holding City Union Bank or generate 16.67% return on investment over 90 days.

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

City Union Bank  vs.  CSB Bank Limited

City Union Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in City Union Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, City Union exhibited solid returns over the last few months and may actually be approaching a breakup point.

CSB Bank Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bank Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, CSB Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with City Union and CSB Bank

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

The idea behind City Union Bank and CSB Bank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.