Correlation Between Taita Chemical and USI Corp

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

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

Diversification Opportunities for Taita Chemical and USI Corp

0.97

Correlation Coefficient

Taita Chemical  USI Corp

Almost no diversification

The 3 months correlation between Taita and USI is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Taita Chemical Co and USI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USI Corp and Taita Chemical 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 Taita Chemical Co are associated (or correlated) with USI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USI Corp has no effect on the direction of Taita Chemical i.e., Taita Chemical and USI Corp go up and down completely randomly.

Pair Corralation between Taita Chemical and USI Corp

Assuming the 90 days trading horizon Taita Chemical Co is expected to under-perform the USI Corp. But the stock apears to be less risky and, when comparing its historical volatility, Taita Chemical Co is 1.38 times less risky than USI Corp. The stock trades about -0.39 of its potential returns per unit of risk. The USI Corp is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  1,440  in USI Corp on October 9, 2024 and sell it today you would lose (285.00) from holding USI Corp or give up 19.79% of portfolio value over 90 days.

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

Taita Chemical Co  vs.  USI Corp

Taita Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taita Chemical Co 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Taita Chemical and USI Corp

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

The idea behind Taita Chemical Co and USI 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.