Correlation Between UET United and CRRC

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

By analyzing existing cross correlation between UET United Electronic and CRRC Limited, you can compare the effects of market volatilities on UET United and CRRC 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 UET United with a short position of CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and CRRC.

Diversification Opportunities for UET United and CRRC

-0.46

Correlation Coefficient

UET United  CRRC

Very good diversification

The 3 months correlation between UET and CRRC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited and UET United 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 UET United Electronic are associated (or correlated) with CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of UET United i.e., UET United and CRRC go up and down completely randomly.

Pair Corralation between UET United and CRRC

Assuming the 90 days trading horizon UET United is expected to generate 5.08 times less return on investment than CRRC. In addition to that, UET United is 1.8 times more volatile than CRRC Limited. It trades about 0.01 of its total potential returns per unit of risk. CRRC Limited is currently generating about 0.13 per unit of volatility. If you would invest  50.00  in CRRC Limited on September 12, 2024 and sell it today you would earn a total of  11.00  from holding CRRC Limited or generate 22.0% return on investment over 90 days.

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

UET United Electronic  vs.  CRRC Limited

UET United Electronic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UET United Electronic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, UET United is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CRRC Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CRRC Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CRRC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UET United and CRRC

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

The idea behind UET United Electronic and CRRC Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.