Correlation Between Great Wall and Uni President

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

By analyzing existing cross correlation between Great Wall Enterprise and Uni President Enterprises Corp, you can compare the effects of market volatilities on Great Wall and Uni President 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 Great Wall with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Uni President.

Diversification Opportunities for Great Wall and Uni President

0.45

Correlation Coefficient

Great Wall  Uni President

Very weak diversification

The 3 months correlation between Great and Uni is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Uni President Enterprises Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President Enterp and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President Enterp has no effect on the direction of Great Wall i.e., Great Wall and Uni President go up and down completely randomly.

Pair Corralation between Great Wall and Uni President

Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.75 times more return on investment than Uni President. However, Great Wall Enterprise is 1.34 times less risky than Uni President. It trades about 0.26 of its potential returns per unit of risk. Uni President Enterprises Corp is currently generating about 0.01 per unit of risk. If you would invest  5,190  in Great Wall Enterprise on December 29, 2024 and sell it today you would earn a total of  630.00  from holding Great Wall Enterprise or generate 12.14% return on investment over 90 days.

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

Great Wall Enterprise  vs.  Uni President Enterprises Corp

Great Wall Enterprise

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great Wall Enterprise are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Great Wall showed solid returns over the last few months and may actually be approaching a breakup point.

Uni President Enterp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uni President Enterprises Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Uni President is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Great Wall and Uni President

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

The idea behind Great Wall Enterprise and Uni President Enterprises Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..