Correlation Between Uniform Industrial and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Uniform Industrial and Leader Electronics 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 Uniform Industrial and Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniform Industrial Corp and Leader Electronics, you can compare the effects of market volatilities on Uniform Industrial and Leader Electronics 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 Uniform Industrial with a short position of Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniform Industrial and Leader Electronics.
Diversification Opportunities for Uniform Industrial and Leader Electronics
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Uniform and Leader is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Uniform Industrial Corp and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and Uniform Industrial 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 Uniform Industrial Corp are associated (or correlated) with Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of Uniform Industrial i.e., Uniform Industrial and Leader Electronics go up and down completely randomly.
Pair Corralation between Uniform Industrial and Leader Electronics
Assuming the 90 days trading horizon Uniform Industrial Corp is expected to generate 1.23 times more return on investment than Leader Electronics. However, Uniform Industrial is 1.23 times more volatile than Leader Electronics. It trades about -0.1 of its potential returns per unit of risk. Leader Electronics is currently generating about -0.13 per unit of risk. If you would invest 3,160 in Uniform Industrial Corp on September 25, 2024 and sell it today you would lose (490.00) from holding Uniform Industrial Corp or give up 15.51% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Uniform Industrial Corp vs. Leader Electronics
Performance |
Timeline |
Uniform Industrial Corp |
Leader Electronics |
Uniform Industrial and Leader Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Uniform Industrial and Leader Electronics
The main advantage of trading using opposite Uniform Industrial and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniform Industrial position performs unexpectedly, Leader Electronics 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 Leader Electronics will offset losses from the drop in Leader Electronics' long position.Uniform Industrial vs. Century Wind Power | Uniform Industrial vs. Green World Fintech | Uniform Industrial vs. Ingentec | Uniform Industrial vs. Chaheng Precision Co |
Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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