Correlation Between BOE Technology and Unisplendour Corp

Can any of the company-specific risk be diversified away by investing in both BOE Technology and Unisplendour 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 BOE Technology and Unisplendour Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOE Technology Group and Unisplendour Corp, you can compare the effects of market volatilities on BOE Technology and Unisplendour 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 BOE Technology with a short position of Unisplendour Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOE Technology and Unisplendour Corp.

Diversification Opportunities for BOE Technology and Unisplendour Corp

0.85

Correlation Coefficient

BOE Technology  Unisplendour Corp

Very poor diversification

The 3 months correlation between BOE and Unisplendour is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BOE Technology Group and Unisplendour Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisplendour Corp and BOE Technology 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 BOE Technology Group are associated (or correlated) with Unisplendour Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisplendour Corp has no effect on the direction of BOE Technology i.e., BOE Technology and Unisplendour Corp go up and down completely randomly.

Pair Corralation between BOE Technology and Unisplendour Corp

Assuming the 90 days trading horizon BOE Technology Group is expected to under-perform the Unisplendour Corp. But the stock apears to be less risky and, when comparing its historical volatility, BOE Technology Group is 1.55 times less risky than Unisplendour Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Unisplendour Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,414  in Unisplendour Corp on September 29, 2024 and sell it today you would earn a total of  482.00  from holding Unisplendour Corp or generate 19.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BOE Technology Group  vs.  Unisplendour Corp

BOE Technology Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOE Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BOE Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unisplendour Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unisplendour Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unisplendour Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOE Technology and Unisplendour Corp

The main advantage of trading using opposite BOE Technology and Unisplendour Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOE Technology position performs unexpectedly, Unisplendour 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 Unisplendour Corp will offset losses from the drop in Unisplendour Corp's long position.

The idea behind BOE Technology Group and Unisplendour Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.