Correlation Between Universal and San Fang
Can any of the company-specific risk be diversified away by investing in both Universal and San Fang 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 and San Fang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and San Fang Chemical, you can compare the effects of market volatilities on Universal and San Fang 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 with a short position of San Fang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and San Fang.
Diversification Opportunities for Universal and San Fang
Good diversification
The 3 months correlation between Universal and San is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Universal and San Fang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fang Chemical and Universal 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 are associated (or correlated) with San Fang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fang Chemical has no effect on the direction of Universal i.e., Universal and San Fang go up and down completely randomly.
Pair Corralation between Universal and San Fang
Assuming the 90 days trading horizon Universal is expected to under-perform the San Fang. In addition to that, Universal is 1.25 times more volatile than San Fang Chemical. It trades about -0.03 of its total potential returns per unit of risk. San Fang Chemical is currently generating about 0.08 per unit of volatility. If you would invest 2,710 in San Fang Chemical on September 3, 2024 and sell it today you would earn a total of 1,310 from holding San Fang Chemical or generate 48.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. San Fang Chemical
Performance |
| Timeline |
| Universal |
| San Fang Chemical |
Universal and San Fang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and San Fang
The main advantage of trading using opposite Universal and San Fang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, San Fang 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 San Fang will offset losses from the drop in San Fang's long position.| Universal vs. Taita Chemical Co | Universal vs. Tah Hsin Industrial | Universal vs. China General Plastics | Universal vs. San Fang Chemical |
| San Fang vs. Asia Polymer Corp | San Fang vs. Taiwan Styrene Monomer | San Fang vs. UPC Technology Corp | San Fang vs. USI 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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