Correlation Between USI Corp and San Fang

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

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

Diversification Opportunities for USI Corp and San Fang

-0.12

Correlation Coefficient

USI Corp  San Fang

Good diversification

The 3 months correlation between USI and San is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding USI Corp and San Fang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fang Chemical and USI Corp 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 USI Corp are associated (or correlated) with San Fang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fang Chemical has no effect on the direction of USI Corp i.e., USI Corp and San Fang go up and down completely randomly.

Pair Corralation between USI Corp and San Fang

Assuming the 90 days trading horizon USI Corp is expected to under-perform the San Fang. But the stock apears to be less risky and, when comparing its historical volatility, USI Corp is 1.36 times less risky than San Fang. The stock trades about -0.12 of its potential returns per unit of risk. The San Fang Chemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,650  in San Fang Chemical on September 16, 2024 and sell it today you would earn a total of  1,155  from holding San Fang Chemical or generate 43.58% return on investment over 90 days.

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

USI Corp  vs.  San Fang Chemical

USI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

San Fang Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Fang Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, San Fang 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 USI Corp and San Fang

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

The idea behind USI Corp and San Fang Chemical 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.