Correlation Between Aprogen Healthcare and Union Materials
Can any of the company-specific risk be diversified away by investing in both Aprogen Healthcare and Union Materials 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 Aprogen Healthcare and Union Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aprogen Healthcare Games and Union Materials Corp, you can compare the effects of market volatilities on Aprogen Healthcare and Union Materials 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 Aprogen Healthcare with a short position of Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aprogen Healthcare and Union Materials.
Diversification Opportunities for Aprogen Healthcare and Union Materials
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aprogen and Union is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aprogen Healthcare Games and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp and Aprogen Healthcare 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 Aprogen Healthcare Games are associated (or correlated) with Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of Aprogen Healthcare i.e., Aprogen Healthcare and Union Materials go up and down completely randomly.
Pair Corralation between Aprogen Healthcare and Union Materials
Assuming the 90 days trading horizon Aprogen Healthcare is expected to generate 4.08 times less return on investment than Union Materials. But when comparing it to its historical volatility, Aprogen Healthcare Games is 1.1 times less risky than Union Materials. It trades about 0.03 of its potential returns per unit of risk. Union Materials Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 213,000 in Union Materials Corp on August 29, 2024 and sell it today you would earn a total of 32,500 from holding Union Materials Corp or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aprogen Healthcare Games vs. Union Materials Corp
Performance |
| Timeline |
| Aprogen Healthcare Games |
| Union Materials Corp |
Aprogen Healthcare and Union Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aprogen Healthcare and Union Materials
The main advantage of trading using opposite Aprogen Healthcare and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aprogen Healthcare position performs unexpectedly, Union Materials 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 Materials will offset losses from the drop in Union Materials' long position.| Aprogen Healthcare vs. NewFlex Technology Co | Aprogen Healthcare vs. Ilji Technology Co | Aprogen Healthcare vs. Green Cross Medical | Aprogen Healthcare vs. Eugene Technology CoLtd |
| Union Materials vs. Lotte Energy Materials | Union Materials vs. Hanjoo Light Metal | Union Materials vs. PI Advanced Materials | Union Materials vs. Aprogen Healthcare Games |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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