Correlation Between Aterian and United Guardian

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Can any of the company-specific risk be diversified away by investing in both Aterian and United Guardian 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 Aterian and United Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aterian and United Guardian, you can compare the effects of market volatilities on Aterian and United Guardian 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 Aterian with a short position of United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and United Guardian.

Diversification Opportunities for Aterian and United Guardian

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aterian and United is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian and Aterian 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 Aterian are associated (or correlated) with United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of Aterian i.e., Aterian and United Guardian go up and down completely randomly.

Pair Corralation between Aterian and United Guardian

Given the investment horizon of 90 days Aterian is expected to under-perform the United Guardian. In addition to that, Aterian is 1.61 times more volatile than United Guardian. It trades about -0.26 of its total potential returns per unit of risk. United Guardian is currently generating about -0.01 per unit of volatility. If you would invest  975.00  in United Guardian on September 23, 2024 and sell it today you would lose (7.00) from holding United Guardian or give up 0.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aterian  vs.  United Guardian

 Performance 
       Timeline  
Aterian 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
United Guardian 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aterian and United Guardian Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aterian and United Guardian

The main advantage of trading using opposite Aterian and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian's long position.
The idea behind Aterian and United Guardian 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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