Correlation Between UET United and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both UET United and ASPEN TECHINC 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 ASPEN TECHINC 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 ASPEN TECHINC DL, you can compare the effects of market volatilities on UET United and ASPEN TECHINC 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 ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and ASPEN TECHINC.
Diversification Opportunities for UET United and ASPEN TECHINC
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UET and ASPEN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of UET United i.e., UET United and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between UET United and ASPEN TECHINC
Assuming the 90 days trading horizon UET United Electronic is expected to generate 12.43 times more return on investment than ASPEN TECHINC. However, UET United is 12.43 times more volatile than ASPEN TECHINC DL. It trades about 0.09 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.17 per unit of risk. If you would invest 87.00 in UET United Electronic on October 20, 2024 and sell it today you would earn a total of 7.00 from holding UET United Electronic or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. ASPEN TECHINC DL
Performance |
| Timeline |
| UET United Electronic |
| ASPEN TECHINC DL |
UET United and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and ASPEN TECHINC
The main advantage of trading using opposite UET United and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.| UET United vs. Cisco Systems | UET United vs. Motorola Solutions | UET United vs. Nokia | UET United vs. Nokia |
| ASPEN TECHINC vs. AEON METALS LTD | ASPEN TECHINC vs. Automatic Data Processing | ASPEN TECHINC vs. Nippon Light Metal | ASPEN TECHINC vs. China Datang |
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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