Correlation Between STPI Public and Unimit Engineering

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

By analyzing existing cross correlation between STPI Public and Unimit Engineering Public, you can compare the effects of market volatilities on STPI Public and Unimit Engineering 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 STPI Public with a short position of Unimit Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of STPI Public and Unimit Engineering.

Diversification Opportunities for STPI Public and Unimit Engineering

0.9

Correlation Coefficient

STPI Public  Unimit Engineering

Almost no diversification

The 3 months correlation between STPI and Unimit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding STPI Public and Unimit Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unimit Engineering Public and STPI Public 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 STPI Public are associated (or correlated) with Unimit Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unimit Engineering Public has no effect on the direction of STPI Public i.e., STPI Public and Unimit Engineering go up and down completely randomly.

Pair Corralation between STPI Public and Unimit Engineering

Assuming the 90 days trading horizon STPI Public is expected to under-perform the Unimit Engineering. In addition to that, STPI Public is 1.39 times more volatile than Unimit Engineering Public. It trades about -0.09 of its total potential returns per unit of risk. Unimit Engineering Public is currently generating about -0.09 per unit of volatility. If you would invest  140.00  in Unimit Engineering Public on September 15, 2024 and sell it today you would lose (12.00) from holding Unimit Engineering Public or give up 8.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

STPI Public  vs.  Unimit Engineering Public

STPI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STPI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Unimit Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unimit Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with STPI Public and Unimit Engineering

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

The idea behind STPI Public and Unimit Engineering Public 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.