Correlation Between China Metal and Univacco Technology
Can any of the company-specific risk be diversified away by investing in both China Metal and Univacco Technology 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 China Metal and Univacco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and Univacco Technology, you can compare the effects of market volatilities on China Metal and Univacco Technology 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 China Metal with a short position of Univacco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Univacco Technology.
Diversification Opportunities for China Metal and Univacco Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Univacco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Univacco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univacco Technology and China Metal 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 China Metal Products are associated (or correlated) with Univacco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univacco Technology has no effect on the direction of China Metal i.e., China Metal and Univacco Technology go up and down completely randomly.
Pair Corralation between China Metal and Univacco Technology
Assuming the 90 days trading horizon China Metal Products is expected to under-perform the Univacco Technology. But the stock apears to be less risky and, when comparing its historical volatility, China Metal Products is 1.5 times less risky than Univacco Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Univacco Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,690 in Univacco Technology on October 25, 2024 and sell it today you would earn a total of 2,225 from holding Univacco Technology or generate 82.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Univacco Technology
Performance |
| Timeline |
| China Metal Products |
| Univacco Technology |
China Metal and Univacco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Univacco Technology
The main advantage of trading using opposite China Metal and Univacco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Univacco Technology 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 Univacco Technology will offset losses from the drop in Univacco Technology's long position.| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
| Univacco Technology vs. HOYA Resort Hotel | Univacco Technology vs. China Development Financial | Univacco Technology vs. Shinkong Insurance Co | Univacco Technology vs. U Ming Marine Transport |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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