Correlation Between UTStarcom Holdings and Danaher

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

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

Diversification Opportunities for UTStarcom Holdings and Danaher

-0.31

Correlation Coefficient

UTStarcom Holdings  Danaher

Very good diversification

The 3 months correlation between UTStarcom and Danaher is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding UTStarcom Holdings Corp and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher and UTStarcom Holdings 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 UTStarcom Holdings Corp are associated (or correlated) with Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of UTStarcom Holdings i.e., UTStarcom Holdings and Danaher go up and down completely randomly.

Pair Corralation between UTStarcom Holdings and Danaher

Assuming the 90 days trading horizon UTStarcom Holdings Corp is expected to generate 0.67 times more return on investment than Danaher. However, UTStarcom Holdings Corp is 1.49 times less risky than Danaher. It trades about 0.09 of its potential returns per unit of risk. Danaher is currently generating about -0.08 per unit of risk. If you would invest  5,274  in UTStarcom Holdings Corp on September 25, 2024 and sell it today you would earn a total of  426.00  from holding UTStarcom Holdings Corp or generate 8.08% return on investment over 90 days.

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

UTStarcom Holdings Corp  vs.  Danaher

UTStarcom Holdings Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UTStarcom Holdings Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, UTStarcom Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Danaher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with UTStarcom Holdings and Danaher

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

The idea behind UTStarcom Holdings Corp and Danaher 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.