Correlation Between Oriental Union and UPC Technology

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

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

Diversification Opportunities for Oriental Union and UPC Technology

0.56

Correlation Coefficient

Oriental Union  UPC Technology

Very weak diversification

The 3 months correlation between Oriental and UPC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Union Chemical and UPC Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPC Technology Corp and Oriental Union 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 Oriental Union Chemical are associated (or correlated) with UPC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPC Technology Corp has no effect on the direction of Oriental Union i.e., Oriental Union and UPC Technology go up and down completely randomly.

Pair Corralation between Oriental Union and UPC Technology

Assuming the 90 days trading horizon Oriental Union Chemical is expected to generate 1.11 times more return on investment than UPC Technology. However, Oriental Union is 1.11 times more volatile than UPC Technology Corp. It trades about 0.06 of its potential returns per unit of risk. UPC Technology Corp is currently generating about 0.05 per unit of risk. If you would invest  1,420  in Oriental Union Chemical on December 30, 2024 and sell it today you would earn a total of  95.00  from holding Oriental Union Chemical or generate 6.69% return on investment over 90 days.

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

Oriental Union Chemical  vs.  UPC Technology Corp

Oriental Union Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Union Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oriental Union may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UPC Technology Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UPC Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, UPC Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Oriental Union and UPC Technology

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

The idea behind Oriental Union Chemical and UPC Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.