Correlation Between UTI Asset and Styrenix Performance

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

By analyzing existing cross correlation between UTI Asset Management and Styrenix Performance Materials, you can compare the effects of market volatilities on UTI Asset and Styrenix Performance 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 UTI Asset with a short position of Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTI Asset and Styrenix Performance.

Diversification Opportunities for UTI Asset and Styrenix Performance

0.56

Correlation Coefficient

UTI Asset  Styrenix Performance

Very weak diversification

The 3 months correlation between UTI and Styrenix is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding UTI Asset Management and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance and UTI Asset 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 UTI Asset Management are associated (or correlated) with Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of UTI Asset i.e., UTI Asset and Styrenix Performance go up and down completely randomly.

Pair Corralation between UTI Asset and Styrenix Performance

Assuming the 90 days trading horizon UTI Asset is expected to generate 4.24 times less return on investment than Styrenix Performance. In addition to that, UTI Asset is 1.04 times more volatile than Styrenix Performance Materials. It trades about 0.04 of its total potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.17 per unit of volatility. If you would invest  238,640  in Styrenix Performance Materials on September 18, 2024 and sell it today you would earn a total of  60,675  from holding Styrenix Performance Materials or generate 25.43% return on investment over 90 days.

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

UTI Asset Management  vs.  Styrenix Performance Materials

UTI Asset Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UTI Asset is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Styrenix Performance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UTI Asset and Styrenix Performance

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

The idea behind UTI Asset Management and Styrenix Performance Materials 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.