Correlation Between U Ming and Unitech Electronics
Can any of the company-specific risk be diversified away by investing in both U Ming and Unitech Electronics 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 U Ming and Unitech Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Ming Marine Transport and Unitech Electronics Co, you can compare the effects of market volatilities on U Ming and Unitech Electronics 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 U Ming with a short position of Unitech Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Unitech Electronics.
Diversification Opportunities for U Ming and Unitech Electronics
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2606 and Unitech is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Unitech Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Electronics and U Ming 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 U Ming Marine Transport are associated (or correlated) with Unitech Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Electronics has no effect on the direction of U Ming i.e., U Ming and Unitech Electronics go up and down completely randomly.
Pair Corralation between U Ming and Unitech Electronics
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 1.28 times more return on investment than Unitech Electronics. However, U Ming is 1.28 times more volatile than Unitech Electronics Co. It trades about -0.04 of its potential returns per unit of risk. Unitech Electronics Co is currently generating about -0.18 per unit of risk. If you would invest 5,760 in U Ming Marine Transport on November 6, 2024 and sell it today you would lose (110.00) from holding U Ming Marine Transport or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Unitech Electronics Co
Performance |
| Timeline |
| U Ming Marine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Unitech Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
U Ming and Unitech Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Unitech Electronics
The main advantage of trading using opposite U Ming and Unitech Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Unitech Electronics 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 Unitech Electronics will offset losses from the drop in Unitech Electronics' long position.The idea behind U Ming Marine Transport and Unitech Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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