Correlation Between IM CoLtd and UTI

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

By analyzing existing cross correlation between IM CoLtd and UTI Inc, you can compare the effects of market volatilities on IM CoLtd and UTI 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 IM CoLtd with a short position of UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IM CoLtd and UTI.

Diversification Opportunities for IM CoLtd and UTI

0.35

Correlation Coefficient

IM CoLtd  UTI

Weak diversification

The 3 months correlation between 101390 and UTI is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding IM CoLtd and UTI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTI Inc and IM CoLtd 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 IM CoLtd are associated (or correlated) with UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTI Inc has no effect on the direction of IM CoLtd i.e., IM CoLtd and UTI go up and down completely randomly.

Pair Corralation between IM CoLtd and UTI

Assuming the 90 days trading horizon IM CoLtd is expected to under-perform the UTI. In addition to that, IM CoLtd is 1.44 times more volatile than UTI Inc. It trades about -0.03 of its total potential returns per unit of risk. UTI Inc is currently generating about 0.03 per unit of volatility. If you would invest  2,230,000  in UTI Inc on September 1, 2024 and sell it today you would earn a total of  80,000  from holding UTI Inc or generate 3.59% return on investment over 90 days.

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

IM CoLtd  vs.  UTI Inc

IM CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IM CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

UTI Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UTI may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IM CoLtd and UTI

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

The idea behind IM CoLtd and UTI Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.