Correlation Between UHF Logistics and KAT Exploration

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

By analyzing existing cross correlation between UHF Logistics Group and KAT Exploration, you can compare the effects of market volatilities on UHF Logistics and KAT Exploration 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 UHF Logistics with a short position of KAT Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of UHF Logistics and KAT Exploration.

Diversification Opportunities for UHF Logistics and KAT Exploration

0.3

Correlation Coefficient

UHF Logistics  KAT Exploration

Weak diversification

The 3 months correlation between UHF and KAT is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding UHF Logistics Group and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration and UHF Logistics 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 UHF Logistics Group are associated (or correlated) with KAT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAT Exploration has no effect on the direction of UHF Logistics i.e., UHF Logistics and KAT Exploration go up and down completely randomly.

Pair Corralation between UHF Logistics and KAT Exploration

Given the investment horizon of 90 days UHF Logistics Group is expected to generate 1.67 times more return on investment than KAT Exploration. However, UHF Logistics is 1.67 times more volatile than KAT Exploration. It trades about 0.15 of its potential returns per unit of risk. KAT Exploration is currently generating about 0.03 per unit of risk. If you would invest  6.75  in UHF Logistics Group on September 15, 2024 and sell it today you would earn a total of  2.53  from holding UHF Logistics Group or generate 37.48% return on investment over 90 days.

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

UHF Logistics Group  vs.  KAT Exploration

UHF Logistics Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UHF Logistics Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, UHF Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

KAT Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KAT Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, KAT Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UHF Logistics and KAT Exploration

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

The idea behind UHF Logistics Group and KAT Exploration 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.