Correlation Between UPC Technology and USI Corp

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

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

Diversification Opportunities for UPC Technology and USI Corp

0.57

Correlation Coefficient

UPC Technology  USI Corp

Very weak diversification

The 3 months correlation between UPC and USI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding UPC Technology Corp and USI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USI Corp and UPC Technology 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 UPC Technology Corp 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 UPC Technology i.e., UPC Technology and USI Corp go up and down completely randomly.

Pair Corralation between UPC Technology and USI Corp

Assuming the 90 days trading horizon UPC Technology Corp is expected to generate 0.65 times more return on investment than USI Corp. However, UPC Technology Corp is 1.54 times less risky than USI Corp. It trades about 0.06 of its potential returns per unit of risk. USI Corp is currently generating about 0.04 per unit of risk. If you would invest  884.00  in UPC Technology Corp on December 28, 2024 and sell it today you would earn a total of  56.00  from holding UPC Technology Corp or generate 6.33% return on investment over 90 days.

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

UPC Technology Corp  vs.  USI Corp

UPC Technology Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UPC Technology Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, UPC Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

USI Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USI Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, USI Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UPC Technology and USI Corp

The main advantage of trading using opposite UPC Technology and USI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPC Technology 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 UPC Technology Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.