Correlation Between United Integrated and BES Engineering
Can any of the company-specific risk be diversified away by investing in both United Integrated and BES Engineering 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 United Integrated and BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Integrated Services and BES Engineering Co, you can compare the effects of market volatilities on United Integrated and BES Engineering 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 United Integrated with a short position of BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Integrated and BES Engineering.
Diversification Opportunities for United Integrated and BES Engineering
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and BES is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding United Integrated Services and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering and United Integrated 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 United Integrated Services are associated (or correlated) with BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of United Integrated i.e., United Integrated and BES Engineering go up and down completely randomly.
Pair Corralation between United Integrated and BES Engineering
Assuming the 90 days trading horizon United Integrated Services is expected to generate 1.04 times more return on investment than BES Engineering. However, United Integrated is 1.04 times more volatile than BES Engineering Co. It trades about 0.08 of its potential returns per unit of risk. BES Engineering Co is currently generating about 0.04 per unit of risk. If you would invest 21,100 in United Integrated Services on August 27, 2024 and sell it today you would earn a total of 19,750 from holding United Integrated Services or generate 93.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Integrated Services vs. BES Engineering Co
Performance |
| Timeline |
| United Integrated |
| BES Engineering |
United Integrated and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Integrated and BES Engineering
The main advantage of trading using opposite United Integrated and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Integrated position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| United Integrated vs. Sunny Friend Environmental | United Integrated vs. TTET Union Corp | United Integrated vs. ECOVE Environment Corp | United Integrated vs. Yulon Finance Corp |
| BES Engineering vs. Sunny Friend Environmental | BES Engineering vs. TTET Union Corp | BES Engineering vs. ECOVE Environment Corp | BES Engineering vs. Yulon Finance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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