Correlation Between Lily Textile and Universal Textile

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

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

Diversification Opportunities for Lily Textile and Universal Textile

0.0

Correlation Coefficient

Lily Textile  Universal Textile

Pay attention - limited upside

The 3 months correlation between Lily and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lily Textile Co and Universal Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Textile and Lily Textile 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 Lily Textile Co are associated (or correlated) with Universal Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Textile has no effect on the direction of Lily Textile i.e., Lily Textile and Universal Textile go up and down completely randomly.

Pair Corralation between Lily Textile and Universal Textile

If you would invest  2,725  in Lily Textile Co on October 10, 2024 and sell it today you would earn a total of  340.00  from holding Lily Textile Co or generate 12.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lily Textile Co  vs.  Universal Textile Co

Lily Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lily Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lily Textile is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Universal Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Universal Textile is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lily Textile and Universal Textile

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

The idea behind Lily Textile Co and Universal Textile Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.