Correlation Between UPC Technology and China General
Can any of the company-specific risk be diversified away by investing in both UPC Technology and China General 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 UPC Technology and China General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPC Technology Corp and China General Plastics, you can compare the effects of market volatilities on UPC Technology and China General 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 UPC Technology with a short position of China General. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPC Technology and China General.
Diversification Opportunities for UPC Technology and China General
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UPC and China is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding UPC Technology Corp and China General Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China General Plastics and UPC Technology 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 UPC Technology Corp are associated (or correlated) with China General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China General Plastics has no effect on the direction of UPC Technology i.e., UPC Technology and China General go up and down completely randomly.
Pair Corralation between UPC Technology and China General
Assuming the 90 days trading horizon UPC Technology Corp is expected to generate 1.13 times more return on investment than China General. However, UPC Technology is 1.13 times more volatile than China General Plastics. It trades about -0.1 of its potential returns per unit of risk. China General Plastics is currently generating about -0.5 per unit of risk. If you would invest 1,110 in UPC Technology Corp on September 1, 2024 and sell it today you would lose (45.00) from holding UPC Technology Corp or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPC Technology Corp vs. China General Plastics
Performance |
| Timeline |
| UPC Technology Corp |
| China General Plastics |
UPC Technology and China General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPC Technology and China General
The main advantage of trading using opposite UPC Technology and China General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPC Technology position performs unexpectedly, China General 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 China General will offset losses from the drop in China General's long position.| UPC Technology vs. Basso Industry Corp | UPC Technology vs. Chung Hsin Electric Machinery | UPC Technology vs. TYC Brother Industrial | UPC Technology vs. TECO Electric Machinery |
| China General vs. Asia Polymer Corp | China General vs. USI Corp | China General vs. Grand Pacific Petrochemical | China General vs. Taiwan Styrene Monomer |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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