Correlation Between Uni President and Hota Industrial

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

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

Diversification Opportunities for Uni President and Hota Industrial

-0.62

Correlation Coefficient

Uni President  Hota Industrial

Excellent diversification

The 3 months correlation between Uni and Hota is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Uni President Enterprises Corp and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and Uni President 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 Uni President Enterprises Corp are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of Uni President i.e., Uni President and Hota Industrial go up and down completely randomly.

Pair Corralation between Uni President and Hota Industrial

Assuming the 90 days trading horizon Uni President Enterprises Corp is expected to under-perform the Hota Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Uni President Enterprises Corp is 2.76 times less risky than Hota Industrial. The stock trades about -0.17 of its potential returns per unit of risk. The Hota Industrial Mfg is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,800  in Hota Industrial Mfg on September 22, 2024 and sell it today you would earn a total of  590.00  from holding Hota Industrial Mfg or generate 10.17% return on investment over 90 days.

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

Uni President Enterprises Corp  vs.  Hota Industrial Mfg

Uni President Enterp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uni President Enterprises Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Hota Industrial Mfg

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hota Industrial Mfg are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hota Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uni President and Hota Industrial

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

The idea behind Uni President Enterprises Corp and Hota Industrial Mfg 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.