Correlation Between 3M India and Uniinfo Telecom

Can any of the company-specific risk be diversified away by investing in both 3M India and Uniinfo Telecom 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 3M India and Uniinfo Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3M India Limited and Uniinfo Telecom Services, you can compare the effects of market volatilities on 3M India and Uniinfo Telecom 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 3M India with a short position of Uniinfo Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M India and Uniinfo Telecom.

Diversification Opportunities for 3M India and Uniinfo Telecom

0.43

Correlation Coefficient

3M India  Uniinfo Telecom

Very weak diversification

The 3 months correlation between 3MINDIA and Uniinfo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding 3M India Limited and Uniinfo Telecom Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniinfo Telecom Services and 3M India 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 3M India Limited are associated (or correlated) with Uniinfo Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniinfo Telecom Services has no effect on the direction of 3M India i.e., 3M India and Uniinfo Telecom go up and down completely randomly.

Pair Corralation between 3M India and Uniinfo Telecom

Assuming the 90 days trading horizon 3M India Limited is expected to under-perform the Uniinfo Telecom. But the stock apears to be less risky and, when comparing its historical volatility, 3M India Limited is 1.81 times less risky than Uniinfo Telecom. The stock trades about -0.11 of its potential returns per unit of risk. The Uniinfo Telecom Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,757  in Uniinfo Telecom Services on September 12, 2024 and sell it today you would earn a total of  156.00  from holding Uniinfo Telecom Services or generate 4.15% return on investment over 90 days.

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

3M India Limited  vs.  Uniinfo Telecom Services

3M India Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3M India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Uniinfo Telecom Services

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uniinfo Telecom Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Uniinfo Telecom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 3M India and Uniinfo Telecom

The main advantage of trading using opposite 3M India and Uniinfo Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M India position performs unexpectedly, Uniinfo Telecom 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 Uniinfo Telecom will offset losses from the drop in Uniinfo Telecom's long position.

The idea behind 3M India Limited and Uniinfo Telecom Services 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 Transaction History module to view history of all your transactions and understand their impact on performance.