Correlation Between USI Corp and Universal Cement
Can any of the company-specific risk be diversified away by investing in both USI Corp and Universal 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 USI Corp and Universal Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USI Corp and Universal Cement Corp, you can compare the effects of market volatilities on USI Corp and Universal 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 USI Corp with a short position of Universal Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of USI Corp and Universal Cement.
Diversification Opportunities for USI Corp and Universal Cement
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USI and Universal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding USI Corp and Universal Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Cement Corp and USI Corp 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 USI Corp are associated (or correlated) with Universal Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Cement Corp has no effect on the direction of USI Corp i.e., USI Corp and Universal Cement go up and down completely randomly.
Pair Corralation between USI Corp and Universal Cement
Assuming the 90 days trading horizon USI Corp is expected to under-perform the Universal Cement. In addition to that, USI Corp is 1.59 times more volatile than Universal Cement Corp. It trades about -0.24 of its total potential returns per unit of risk. Universal Cement Corp is currently generating about -0.14 per unit of volatility. If you would invest 3,025 in Universal Cement Corp on September 1, 2024 and sell it today you would lose (100.00) from holding Universal Cement Corp or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
USI Corp vs. Universal Cement Corp
Performance |
| Timeline |
| USI Corp |
| Universal Cement Corp |
USI Corp and Universal Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USI Corp and Universal Cement
The main advantage of trading using opposite USI Corp and Universal Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USI Corp position performs unexpectedly, Universal 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 Universal Cement will offset losses from the drop in Universal Cement's long position.| USI Corp vs. Basso Industry Corp | USI Corp vs. Chung Hsin Electric Machinery | USI Corp vs. TYC Brother Industrial | USI Corp vs. TECO Electric Machinery |
| Universal Cement vs. Chia Hsin Cement | Universal Cement vs. Hsing Ta Cement | Universal Cement vs. USI Corp | Universal Cement vs. Asia Polymer Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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