Correlation Between Grand Canyon and UET United

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

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

Diversification Opportunities for Grand Canyon and UET United

0.45

Correlation Coefficient

Grand Canyon  UET United

Very weak diversification

The 3 months correlation between Grand and UET is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and UET United Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UET United Electronic and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with UET United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UET United Electronic has no effect on the direction of Grand Canyon i.e., Grand Canyon and UET United go up and down completely randomly.

Pair Corralation between Grand Canyon and UET United

Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.36 times more return on investment than UET United. However, Grand Canyon Education is 2.8 times less risky than UET United. It trades about -0.15 of its potential returns per unit of risk. UET United Electronic is currently generating about -0.25 per unit of risk. If you would invest  16,000  in Grand Canyon Education on September 25, 2024 and sell it today you would lose (700.00) from holding Grand Canyon Education or give up 4.37% of portfolio value over 90 days.

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

Grand Canyon Education  vs.  UET United Electronic

Grand Canyon Education

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grand Canyon unveiled solid returns over the last few months and may actually be approaching a breakup point.

UET United Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UET United Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Grand Canyon and UET United

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

The idea behind Grand Canyon Education and UET United Electronic 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..