Correlation Between UET United and China Merchants
Can any of the company-specific risk be diversified away by investing in both UET United and China Merchants 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 UET United and China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and China Merchants Bank, you can compare the effects of market volatilities on UET United and China Merchants 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 UET United with a short position of China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and China Merchants.
Diversification Opportunities for UET United and China Merchants
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UET and China is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank and UET United 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 UET United Electronic are associated (or correlated) with China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of UET United i.e., UET United and China Merchants go up and down completely randomly.
Pair Corralation between UET United and China Merchants
Assuming the 90 days trading horizon UET United Electronic is expected to generate 2.6 times more return on investment than China Merchants. However, UET United is 2.6 times more volatile than China Merchants Bank. It trades about 0.16 of its potential returns per unit of risk. China Merchants Bank is currently generating about -0.04 per unit of risk. If you would invest 81.00 in UET United Electronic on September 5, 2024 and sell it today you would earn a total of 17.00 from holding UET United Electronic or generate 20.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
UET United Electronic vs. China Merchants Bank
Performance |
| Timeline |
| UET United Electronic |
| China Merchants Bank |
UET United and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and China Merchants
The main advantage of trading using opposite UET United and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| UET United vs. HANOVER INSURANCE | UET United vs. The Hanover Insurance | UET United vs. ZURICH INSURANCE GROUP | UET United vs. CENTURIA OFFICE REIT |
| China Merchants vs. Lendlease Group | China Merchants vs. Richardson Electronics | China Merchants vs. UET United Electronic | China Merchants 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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