Correlation Between United Integrated and Nova Technology
Can any of the company-specific risk be diversified away by investing in both United Integrated and Nova 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 United Integrated and Nova Technology 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 Nova Technology, you can compare the effects of market volatilities on United Integrated and Nova 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 United Integrated with a short position of Nova Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Integrated and Nova Technology.
Diversification Opportunities for United Integrated and Nova Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Nova is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Integrated Services and Nova Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Technology 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 Nova Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Technology has no effect on the direction of United Integrated i.e., United Integrated and Nova Technology go up and down completely randomly.
Pair Corralation between United Integrated and Nova Technology
Assuming the 90 days trading horizon United Integrated Services is expected to generate 1.17 times more return on investment than Nova Technology. However, United Integrated is 1.17 times more volatile than Nova Technology. It trades about 0.47 of its potential returns per unit of risk. Nova Technology is currently generating about 0.03 per unit of risk. If you would invest 33,800 in United Integrated Services on September 1, 2024 and sell it today you would earn a total of 9,050 from holding United Integrated Services or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Integrated Services vs. Nova Technology
Performance |
| Timeline |
| United Integrated |
| Nova Technology |
United Integrated and Nova Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Integrated and Nova Technology
The main advantage of trading using opposite United Integrated and Nova Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Integrated position performs unexpectedly, Nova 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 Nova Technology will offset losses from the drop in Nova Technology'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 |
| Nova Technology vs. Sunonwealth Electric Machine | Nova Technology vs. Rechi Precision Co | Nova Technology vs. Fittech Co | Nova Technology vs. C Sun Manufacturing |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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