Correlation Between UET United and Anglo American
Can any of the company-specific risk be diversified away by investing in both UET United and Anglo American 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 Anglo American 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 Anglo American plc, you can compare the effects of market volatilities on UET United and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and Anglo American.
Diversification Opportunities for UET United and Anglo American
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between UET and Anglo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of UET United i.e., UET United and Anglo American go up and down completely randomly.
Pair Corralation between UET United and Anglo American
Assuming the 90 days trading horizon UET United Electronic is expected to generate 3.84 times more return on investment than Anglo American. However, UET United is 3.84 times more volatile than Anglo American plc. It trades about 0.14 of its potential returns per unit of risk. Anglo American plc is currently generating about 0.4 per unit of risk. If you would invest 81.00 in UET United Electronic on September 13, 2024 and sell it today you would earn a total of 14.00 from holding UET United Electronic or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. Anglo American plc
Performance |
| Timeline |
| UET United Electronic |
| Anglo American plc |
UET United and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and Anglo American
The main advantage of trading using opposite UET United and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| UET United vs. Cisco Systems | UET United vs. Nokia | UET United vs. Hewlett Packard Enterprise | UET United vs. Superior Plus Corp |
| Anglo American vs. QURATE RETAIL INC | Anglo American vs. CVS Health | Anglo American vs. Auto Trader Group | Anglo American vs. The Trade Desk |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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