Correlation Between Chin Poon and Unitech Printed

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

By analyzing existing cross correlation between Chin Poon Industrial Co and Unitech Printed Circuit, you can compare the effects of market volatilities on Chin Poon and Unitech Printed 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 Chin Poon with a short position of Unitech Printed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chin Poon and Unitech Printed.

Diversification Opportunities for Chin Poon and Unitech Printed

0.79

Correlation Coefficient

Chin Poon  Unitech Printed

Poor diversification

The 3 months correlation between Chin and Unitech is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chin Poon Industrial Co and Unitech Printed Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Printed Circuit and Chin Poon 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 Chin Poon Industrial Co are associated (or correlated) with Unitech Printed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Printed Circuit has no effect on the direction of Chin Poon i.e., Chin Poon and Unitech Printed go up and down completely randomly.

Pair Corralation between Chin Poon and Unitech Printed

Assuming the 90 days trading horizon Chin Poon is expected to generate 1.9 times less return on investment than Unitech Printed. But when comparing it to its historical volatility, Chin Poon Industrial Co is 1.18 times less risky than Unitech Printed. It trades about 0.03 of its potential returns per unit of risk. Unitech Printed Circuit is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,765  in Unitech Printed Circuit on December 5, 2024 and sell it today you would earn a total of  1,215  from holding Unitech Printed Circuit or generate 68.84% return on investment over 90 days.

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

Chin Poon Industrial Co  vs.  Unitech Printed Circuit

Chin Poon Industrial

Risk-Adjusted Performance

Very Weak

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

Unitech Printed Circuit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unitech Printed Circuit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chin Poon and Unitech Printed

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

The idea behind Chin Poon Industrial Co and Unitech Printed Circuit 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.