Correlation Between United Integrated and LK Engineering
Can any of the company-specific risk be diversified away by investing in both United Integrated and LK 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 LK 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 LK Engineering Co, you can compare the effects of market volatilities on United Integrated and LK 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 LK Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Integrated and LK Engineering.
Diversification Opportunities for United Integrated and LK Engineering
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and 6139 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Integrated Services and LK Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LK 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 LK Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LK Engineering has no effect on the direction of United Integrated i.e., United Integrated and LK Engineering go up and down completely randomly.
Pair Corralation between United Integrated and LK Engineering
Assuming the 90 days trading horizon United Integrated Services is expected to generate 0.95 times more return on investment than LK Engineering. However, United Integrated Services is 1.05 times less risky than LK Engineering. It trades about 0.41 of its potential returns per unit of risk. LK Engineering Co is currently generating about 0.04 per unit of risk. If you would invest 33,800 in United Integrated Services on August 31, 2024 and sell it today you would earn a total of 7,500 from holding United Integrated Services or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Integrated Services vs. LK Engineering Co
Performance |
| Timeline |
| United Integrated |
| LK Engineering |
United Integrated and LK Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Integrated and LK Engineering
The main advantage of trading using opposite United Integrated and LK Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Integrated position performs unexpectedly, LK 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 LK Engineering will offset losses from the drop in LK Engineering's long position.| United Integrated vs. BES Engineering Co | United Integrated vs. Continental Holdings Corp | United Integrated vs. Kee Tai Properties | United Integrated vs. Hung Sheng Construction |
| LK Engineering vs. United Integrated Services | LK Engineering vs. Topco Scientific Co | LK Engineering vs. Marketech International Corp | LK Engineering vs. Asia Optical Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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