Correlation Between Applied Materials and UTD OV
Can any of the company-specific risk be diversified away by investing in both Applied Materials and UTD OV 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 Applied Materials and UTD OV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and UTD OV BK LOC ADR1, you can compare the effects of market volatilities on Applied Materials and UTD OV 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 Applied Materials with a short position of UTD OV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and UTD OV.
Diversification Opportunities for Applied Materials and UTD OV
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and UTD is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and UTD OV BK LOC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTD OV BK and Applied Materials 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 Applied Materials are associated (or correlated) with UTD OV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTD OV BK has no effect on the direction of Applied Materials i.e., Applied Materials and UTD OV go up and down completely randomly.
Pair Corralation between Applied Materials and UTD OV
Assuming the 90 days horizon Applied Materials is expected to generate 2.06 times more return on investment than UTD OV. However, Applied Materials is 2.06 times more volatile than UTD OV BK LOC ADR1. It trades about 0.05 of its potential returns per unit of risk. UTD OV BK LOC ADR1 is currently generating about 0.07 per unit of risk. If you would invest 10,564 in Applied Materials on November 1, 2024 and sell it today you would earn a total of 6,292 from holding Applied Materials or generate 59.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. UTD OV BK LOC ADR1
Performance |
| Timeline |
| Applied Materials |
| UTD OV BK |
Applied Materials and UTD OV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and UTD OV
The main advantage of trading using opposite Applied Materials and UTD OV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, UTD OV 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 UTD OV will offset losses from the drop in UTD OV's long position.| Applied Materials vs. GWILLI FOOD | Applied Materials vs. Siemens Healthineers AG | Applied Materials vs. OPKO HEALTH | Applied Materials vs. Cardinal Health |
| UTD OV vs. FUYO GENERAL LEASE | UTD OV vs. United Rentals | UTD OV vs. Regal Hotels International | UTD OV vs. ALBIS LEASING AG |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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