Correlation Between Universal Electronics and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Universal Electronics and Xiaomi Corp 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 Universal Electronics and Xiaomi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Electronics and Xiaomi Corp, you can compare the effects of market volatilities on Universal Electronics and Xiaomi Corp 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 Universal Electronics with a short position of Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Electronics and Xiaomi Corp.
Diversification Opportunities for Universal Electronics and Xiaomi Corp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and Xiaomi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and Xiaomi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp and Universal Electronics 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 Universal Electronics are associated (or correlated) with Xiaomi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi Corp has no effect on the direction of Universal Electronics i.e., Universal Electronics and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Universal Electronics and Xiaomi Corp
Given the investment horizon of 90 days Universal Electronics is expected to under-perform the Xiaomi Corp. But the stock apears to be less risky and, when comparing its historical volatility, Universal Electronics is 1.74 times less risky than Xiaomi Corp. The stock trades about -0.08 of its potential returns per unit of risk. The Xiaomi Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 396.00 in Xiaomi Corp on October 20, 2024 and sell it today you would earn a total of 61.00 from holding Xiaomi Corp or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Electronics vs. Xiaomi Corp
Performance |
| Timeline |
| Universal Electronics |
| Xiaomi Corp |
Universal Electronics and Xiaomi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Electronics and Xiaomi Corp
The main advantage of trading using opposite Universal Electronics and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Electronics position performs unexpectedly, Xiaomi Corp 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 Xiaomi Corp will offset losses from the drop in Xiaomi Corp's long position.| Universal Electronics vs. LG Display Co | Universal Electronics vs. Zepp Health Corp | Universal Electronics vs. Sonos Inc | Universal Electronics vs. VOXX International |
| Xiaomi Corp vs. Zepp Health Corp | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Sharp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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