Correlation Between UET United and 3M

Can any of the company-specific risk be diversified away by investing in both UET United and 3M 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 3M 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 3M Company, you can compare the effects of market volatilities on UET United and 3M 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 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and 3M.

Diversification Opportunities for UET United and 3M

0.07

Correlation Coefficient

UET United  3M

Significant diversification

The 3 months correlation between UET and 3M is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company 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 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of UET United i.e., UET United and 3M go up and down completely randomly.

Pair Corralation between UET United and 3M

Assuming the 90 days trading horizon UET United Electronic is expected to generate 2.14 times more return on investment than 3M. However, UET United is 2.14 times more volatile than 3M Company. It trades about 0.03 of its potential returns per unit of risk. 3M Company is currently generating about 0.03 per unit of risk. If you would invest  78.00  in UET United Electronic on September 5, 2024 and sell it today you would earn a total of  20.00  from holding UET United Electronic or generate 25.64% return on investment over 90 days.

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

UET United Electronic  vs.  3M Company

UET United Electronic

Risk-Adjusted Performance

3 of 100

Insignificant

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

3M Company

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with UET United and 3M

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

The idea behind UET United Electronic and 3M Company 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.