Correlation Between Eureka Design and Union Petrochemical
Can any of the company-specific risk be diversified away by investing in both Eureka Design and Union Petrochemical 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 Eureka Design and Union Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eureka Design Public and Union Petrochemical Public, you can compare the effects of market volatilities on Eureka Design and Union Petrochemical 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 Eureka Design with a short position of Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eureka Design and Union Petrochemical.
Diversification Opportunities for Eureka Design and Union Petrochemical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eureka and Union is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Design Public and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical and Eureka Design 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 Eureka Design Public are associated (or correlated) with Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of Eureka Design i.e., Eureka Design and Union Petrochemical go up and down completely randomly.
Pair Corralation between Eureka Design and Union Petrochemical
Assuming the 90 days trading horizon Eureka Design Public is expected to generate 1.31 times more return on investment than Union Petrochemical. However, Eureka Design is 1.31 times more volatile than Union Petrochemical Public. It trades about 0.11 of its potential returns per unit of risk. Union Petrochemical Public is currently generating about -0.23 per unit of risk. If you would invest 49.00 in Eureka Design Public on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Eureka Design Public or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eureka Design Public vs. Union Petrochemical Public
Performance |
| Timeline |
| Eureka Design Public |
| Union Petrochemical |
Eureka Design and Union Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eureka Design and Union Petrochemical
The main advantage of trading using opposite Eureka Design and Union Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eureka Design position performs unexpectedly, Union Petrochemical 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 Union Petrochemical will offset losses from the drop in Union Petrochemical's long position.| Eureka Design vs. Delta Electronics Public | Eureka Design vs. Delta Electronics Public | Eureka Design vs. Airports of Thailand | Eureka Design vs. Airports of Thailand |
| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel Public | Union Petrochemical vs. TPI Polene Public |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |