Correlation Between LabGenomics and UNISEM

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

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

Diversification Opportunities for LabGenomics and UNISEM

0.34

Correlation Coefficient

LabGenomics  UNISEM

Weak diversification

The 3 months correlation between LabGenomics and UNISEM is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LabGenomics Co and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM and LabGenomics 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 LabGenomics Co are associated (or correlated) with UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of LabGenomics i.e., LabGenomics and UNISEM go up and down completely randomly.

Pair Corralation between LabGenomics and UNISEM

Assuming the 90 days trading horizon LabGenomics is expected to generate 1.72 times less return on investment than UNISEM. In addition to that, LabGenomics is 1.73 times more volatile than UNISEM Co. It trades about 0.05 of its total potential returns per unit of risk. UNISEM Co is currently generating about 0.13 per unit of volatility. If you would invest  550,356  in UNISEM Co on December 4, 2024 and sell it today you would earn a total of  120,644  from holding UNISEM Co or generate 21.92% return on investment over 90 days.

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

LabGenomics Co  vs.  UNISEM Co

LabGenomics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LabGenomics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LabGenomics sustained solid returns over the last few months and may actually be approaching a breakup point.

UNISEM

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNISEM Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UNISEM sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LabGenomics and UNISEM

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

The idea behind LabGenomics Co and UNISEM Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.