Correlation Between Consolidated Construction and Uniinfo Telecom

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

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

Diversification Opportunities for Consolidated Construction and Uniinfo Telecom

0.49

Correlation Coefficient

Consolidated Construction  Uniinfo Telecom

Very weak diversification

The 3 months correlation between Consolidated and Uniinfo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons 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 Consolidated Construction 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 Consolidated Construction Consortium 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 Consolidated Construction i.e., Consolidated Construction and Uniinfo Telecom go up and down completely randomly.

Pair Corralation between Consolidated Construction and Uniinfo Telecom

Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 1.23 times more return on investment than Uniinfo Telecom. However, Consolidated Construction is 1.23 times more volatile than Uniinfo Telecom Services. It trades about 0.05 of its potential returns per unit of risk. Uniinfo Telecom Services is currently generating about 0.03 per unit of risk. If you would invest  1,687  in Consolidated Construction Consortium on September 13, 2024 and sell it today you would earn a total of  113.00  from holding Consolidated Construction Consortium or generate 6.7% return on investment over 90 days.

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

Consolidated Construction Cons  vs.  Uniinfo Telecom Services

Consolidated Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Construction Consortium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Consolidated Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Uniinfo Telecom Services

Risk-Adjusted Performance

2 of 100

Weak

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 healthy basic indicators, Uniinfo Telecom is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Consolidated Construction and Uniinfo Telecom

The main advantage of trading using opposite Consolidated Construction and Uniinfo Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction 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 Consolidated Construction Consortium 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.