Correlation Between UPC Technology and Oriental Union
Can any of the company-specific risk be diversified away by investing in both UPC Technology and Oriental Union 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 Oriental Union 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 Oriental Union Chemical, you can compare the effects of market volatilities on UPC Technology and Oriental Union 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 Oriental Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPC Technology and Oriental Union.
Diversification Opportunities for UPC Technology and Oriental Union
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UPC and Oriental is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding UPC Technology Corp and Oriental Union Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Union Chemical 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 Oriental Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Union Chemical has no effect on the direction of UPC Technology i.e., UPC Technology and Oriental Union go up and down completely randomly.
Pair Corralation between UPC Technology and Oriental Union
Assuming the 90 days trading horizon UPC Technology Corp is expected to generate 1.34 times more return on investment than Oriental Union. However, UPC Technology is 1.34 times more volatile than Oriental Union Chemical. It trades about -0.04 of its potential returns per unit of risk. Oriental Union Chemical is currently generating about -0.08 per unit of risk. If you would invest 1,455 in UPC Technology Corp on September 1, 2024 and sell it today you would lose (390.00) from holding UPC Technology Corp or give up 26.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPC Technology Corp vs. Oriental Union Chemical
Performance |
| Timeline |
| UPC Technology Corp |
| Oriental Union Chemical |
UPC Technology and Oriental Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPC Technology and Oriental Union
The main advantage of trading using opposite UPC Technology and Oriental Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPC Technology position performs unexpectedly, Oriental Union 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 Oriental Union will offset losses from the drop in Oriental Union'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 |
| Oriental Union vs. Basso Industry Corp | Oriental Union vs. Chung Hsin Electric Machinery | Oriental Union vs. TYC Brother Industrial | Oriental Union vs. TECO Electric Machinery |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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