Correlation Between USI Corp and China Man
Can any of the company-specific risk be diversified away by investing in both USI Corp and China Man 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 China Man into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USI Corp and China Man Made Fiber, you can compare the effects of market volatilities on USI Corp and China Man 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 China Man. Check out your portfolio center. Please also check ongoing floating volatility patterns of USI Corp and China Man.
Diversification Opportunities for USI Corp and China Man
Very poor diversification
The 3 months correlation between USI and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding USI Corp and China Man Made Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Man Made 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 China Man. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Man Made has no effect on the direction of USI Corp i.e., USI Corp and China Man go up and down completely randomly.
Pair Corralation between USI Corp and China Man
Assuming the 90 days trading horizon USI Corp is expected to generate 2.23 times more return on investment than China Man. However, USI Corp is 2.23 times more volatile than China Man Made Fiber. It trades about 0.11 of its potential returns per unit of risk. China Man Made Fiber is currently generating about 0.12 per unit of risk. If you would invest 1,125 in USI Corp on December 4, 2024 and sell it today you would earn a total of 65.00 from holding USI Corp or generate 5.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
USI Corp vs. China Man Made Fiber
Performance |
Timeline |
USI Corp |
China Man Made |
USI Corp and China Man Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with USI Corp and China Man
The main advantage of trading using opposite USI Corp and China Man positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USI Corp position performs unexpectedly, China Man 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 China Man will offset losses from the drop in China Man's long position.USI Corp vs. Asia Polymer Corp | USI Corp vs. Taiwan Styrene Monomer | USI Corp vs. UPC Technology Corp | USI Corp vs. China Petrochemical Development |
China Man vs. Oriental Union Chemical | China Man vs. China Petrochemical Development | China Man vs. Taiwan Styrene Monomer | China Man vs. Grand Pacific Petrochemical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |