Correlation Between USI Corp and Pontex Polyblend

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

By analyzing existing cross correlation between USI Corp and Pontex Polyblend CoLtd, you can compare the effects of market volatilities on USI Corp and Pontex Polyblend 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 Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of USI Corp and Pontex Polyblend.

Diversification Opportunities for USI Corp and Pontex Polyblend

0.23

Correlation Coefficient

USI Corp  Pontex Polyblend

Modest diversification

The 3 months correlation between USI and Pontex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding USI Corp and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd 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 Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of USI Corp i.e., USI Corp and Pontex Polyblend go up and down completely randomly.

Pair Corralation between USI Corp and Pontex Polyblend

Assuming the 90 days trading horizon USI Corp is expected to generate 1.17 times more return on investment than Pontex Polyblend. However, USI Corp is 1.17 times more volatile than Pontex Polyblend CoLtd. It trades about 0.03 of its potential returns per unit of risk. Pontex Polyblend CoLtd is currently generating about -0.12 per unit of risk. If you would invest  1,095  in USI Corp on December 29, 2024 and sell it today you would earn a total of  20.00  from holding USI Corp or generate 1.83% return on investment over 90 days.

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

USI Corp  vs.  Pontex Polyblend CoLtd

USI Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in USI Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, USI Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pontex Polyblend CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pontex Polyblend CoLtd 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with USI Corp and Pontex Polyblend

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

The idea behind USI Corp and Pontex Polyblend CoLtd 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.