Correlation Between New Advanced and Universal Textile
Can any of the company-specific risk be diversified away by investing in both New Advanced and Universal Textile 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 New Advanced and Universal Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Advanced Electronics and Universal Textile Co, you can compare the effects of market volatilities on New Advanced and Universal Textile 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 New Advanced with a short position of Universal Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Advanced and Universal Textile.
Diversification Opportunities for New Advanced and Universal Textile
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Universal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding New Advanced Electronics and Universal Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Textile and New Advanced 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 New Advanced Electronics are associated (or correlated) with Universal Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Textile has no effect on the direction of New Advanced i.e., New Advanced and Universal Textile go up and down completely randomly.
Pair Corralation between New Advanced and Universal Textile
Assuming the 90 days trading horizon New Advanced Electronics is expected to under-perform the Universal Textile. In addition to that, New Advanced is 1.03 times more volatile than Universal Textile Co. It trades about -0.03 of its total potential returns per unit of risk. Universal Textile Co is currently generating about -0.02 per unit of volatility. If you would invest 2,125 in Universal Textile Co on August 29, 2024 and sell it today you would lose (350.00) from holding Universal Textile Co or give up 16.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Advanced Electronics vs. Universal Textile Co
Performance |
| Timeline |
| New Advanced Electronics |
| Universal Textile |
New Advanced and Universal Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Advanced and Universal Textile
The main advantage of trading using opposite New Advanced and Universal Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Advanced position performs unexpectedly, Universal Textile 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 Universal Textile will offset losses from the drop in Universal Textile's long position.| New Advanced vs. Syntek Semiconductor Co | New Advanced vs. Powerchip Semiconductor Manufacturing | New Advanced vs. Realtek Semiconductor Corp | New Advanced vs. FarGlory Hotel Co |
| Universal Textile vs. Yulon Finance Corp | Universal Textile vs. Taiwan Secom Co | Universal Textile vs. Pou Chen Corp | Universal Textile vs. Great Wall Enterprise |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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