Correlation Between Universal Cement and Asia Cement
Can any of the company-specific risk be diversified away by investing in both Universal Cement and Asia Cement 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 Universal Cement and Asia Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Cement Corp and Asia Cement Corp, you can compare the effects of market volatilities on Universal Cement and Asia Cement 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 Universal Cement with a short position of Asia Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Cement and Asia Cement.
Diversification Opportunities for Universal Cement and Asia Cement
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Asia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Universal Cement Corp and Asia Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Cement Corp and Universal Cement 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 Universal Cement Corp are associated (or correlated) with Asia Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Cement Corp has no effect on the direction of Universal Cement i.e., Universal Cement and Asia Cement go up and down completely randomly.
Pair Corralation between Universal Cement and Asia Cement
Assuming the 90 days trading horizon Universal Cement Corp is expected to under-perform the Asia Cement. In addition to that, Universal Cement is 1.22 times more volatile than Asia Cement Corp. It trades about -0.07 of its total potential returns per unit of risk. Asia Cement Corp is currently generating about 0.01 per unit of volatility. If you would invest 4,160 in Asia Cement Corp on September 1, 2024 and sell it today you would earn a total of 45.00 from holding Asia Cement Corp or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Universal Cement Corp vs. Asia Cement Corp
Performance |
| Timeline |
| Universal Cement Corp |
| Asia Cement Corp |
Universal Cement and Asia Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Cement and Asia Cement
The main advantage of trading using opposite Universal Cement and Asia Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Cement position performs unexpectedly, Asia Cement 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 Asia Cement will offset losses from the drop in Asia Cement's long position.| Universal Cement vs. Chia Hsin Cement | Universal Cement vs. Hsing Ta Cement | Universal Cement vs. USI Corp | Universal Cement vs. Asia Polymer Corp |
| Asia Cement vs. Taiwan Cement Corp | Asia Cement vs. Far Eastern New | Asia Cement vs. Uni President Enterprises Corp | Asia Cement vs. Nan Ya Plastics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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