Correlation Between UE Furniture and Innovative Medical

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Can any of the company-specific risk be diversified away by investing in both UE Furniture and Innovative Medical 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 UE Furniture and Innovative Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UE Furniture Co and Innovative Medical Management, you can compare the effects of market volatilities on UE Furniture and Innovative Medical 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 UE Furniture with a short position of Innovative Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of UE Furniture and Innovative Medical.

Diversification Opportunities for UE Furniture and Innovative Medical

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between 603600 and Innovative is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding UE Furniture Co and Innovative Medical Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Medical and UE Furniture 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 UE Furniture Co are associated (or correlated) with Innovative Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Medical has no effect on the direction of UE Furniture i.e., UE Furniture and Innovative Medical go up and down completely randomly.

Pair Corralation between UE Furniture and Innovative Medical

Assuming the 90 days trading horizon UE Furniture Co is expected to generate 0.65 times more return on investment than Innovative Medical. However, UE Furniture Co is 1.54 times less risky than Innovative Medical. It trades about 0.09 of its potential returns per unit of risk. Innovative Medical Management is currently generating about -0.02 per unit of risk. If you would invest  1,170  in UE Furniture Co on October 30, 2024 and sell it today you would earn a total of  115.00  from holding UE Furniture Co or generate 9.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

UE Furniture Co  vs.  Innovative Medical Management

 Performance 
       Timeline  
UE Furniture 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in UE Furniture Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UE Furniture is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Innovative Medical 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Medical Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innovative Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

UE Furniture and Innovative Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UE Furniture and Innovative Medical

The main advantage of trading using opposite UE Furniture and Innovative Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UE Furniture position performs unexpectedly, Innovative Medical 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 Innovative Medical will offset losses from the drop in Innovative Medical's long position.
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The idea behind UE Furniture Co and Innovative Medical Management 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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