Correlation Between Uni President and Primo Water
Can any of the company-specific risk be diversified away by investing in both Uni President and Primo Water 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 Uni President and Primo Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uni President China Holdings and Primo Water Corp, you can compare the effects of market volatilities on Uni President and Primo Water 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 Uni President with a short position of Primo Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Primo Water.
Diversification Opportunities for Uni President and Primo Water
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uni and Primo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Uni President China Holdings and Primo Water Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Water Corp and Uni President 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 Uni President China Holdings are associated (or correlated) with Primo Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Water Corp has no effect on the direction of Uni President i.e., Uni President and Primo Water go up and down completely randomly.
Pair Corralation between Uni President and Primo Water
Assuming the 90 days horizon Uni President China Holdings is expected to generate 1.04 times more return on investment than Primo Water. However, Uni President is 1.04 times more volatile than Primo Water Corp. It trades about -0.19 of its potential returns per unit of risk. Primo Water Corp is currently generating about -0.33 per unit of risk. If you would invest 78.00 in Uni President China Holdings on August 28, 2024 and sell it today you would lose (6.00) from holding Uni President China Holdings or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 52.38% |
| Values | Daily Returns |
Uni President China Holdings vs. Primo Water Corp
Performance |
| Timeline |
| Uni President China |
| Primo Water Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Uni President and Primo Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uni President and Primo Water
The main advantage of trading using opposite Uni President and Primo Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President position performs unexpectedly, Primo Water 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 Primo Water will offset losses from the drop in Primo Water's long position.| Uni President vs. Superior Plus Corp | Uni President vs. NMI Holdings | Uni President vs. Origin Agritech | Uni President vs. SIVERS SEMICONDUCTORS AB |
| Primo Water vs. Superior Plus Corp | Primo Water vs. NMI Holdings | Primo Water vs. Origin Agritech | Primo Water vs. SIVERS SEMICONDUCTORS AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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