Correlation Between Union Materials and EBEST Investment
Can any of the company-specific risk be diversified away by investing in both Union Materials and EBEST Investment 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 Materials and EBEST Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and EBEST Investment Securities, you can compare the effects of market volatilities on Union Materials and EBEST Investment 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 Materials with a short position of EBEST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and EBEST Investment.
Diversification Opportunities for Union Materials and EBEST Investment
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and EBEST is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and EBEST Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBEST Investment Sec and Union Materials 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 Materials Corp are associated (or correlated) with EBEST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBEST Investment Sec has no effect on the direction of Union Materials i.e., Union Materials and EBEST Investment go up and down completely randomly.
Pair Corralation between Union Materials and EBEST Investment
Assuming the 90 days trading horizon Union Materials is expected to generate 12.22 times less return on investment than EBEST Investment. In addition to that, Union Materials is 1.43 times more volatile than EBEST Investment Securities. It trades about 0.01 of its total potential returns per unit of risk. EBEST Investment Securities is currently generating about 0.21 per unit of volatility. If you would invest 374,500 in EBEST Investment Securities on November 3, 2024 and sell it today you would earn a total of 24,500 from holding EBEST Investment Securities or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. EBEST Investment Securities
Performance |
| Timeline |
| Union Materials Corp |
| EBEST Investment Sec |
Union Materials and EBEST Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and EBEST Investment
The main advantage of trading using opposite Union Materials and EBEST Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, EBEST Investment 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 EBEST Investment will offset losses from the drop in EBEST Investment's long position.| Union Materials vs. FoodNamoo | Union Materials vs. Digital Power Communications | Union Materials vs. Cuckoo Homesys Co | Union Materials vs. Organic Special Pet |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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