Correlation Between Applied UV and Aterian

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

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

Diversification Opportunities for Applied UV and Aterian

0.61

Correlation Coefficient

Applied UV  Aterian

Poor diversification

The 3 months correlation between Applied and Aterian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Applied UV Preferred and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Applied UV 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 Applied UV Preferred are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Applied UV i.e., Applied UV and Aterian go up and down completely randomly.

Pair Corralation between Applied UV and Aterian

If you would invest  3.00  in Applied UV Preferred on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Applied UV Preferred or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Applied UV Preferred  vs.  Aterian

Applied UV Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied UV Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Applied UV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aterian

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Applied UV and Aterian

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

The idea behind Applied UV Preferred and Aterian 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.