Correlation Between Unitech Computer and Kunyue Development

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

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

Diversification Opportunities for Unitech Computer and Kunyue Development

-0.04

Correlation Coefficient

Unitech Computer  Kunyue Development

Good diversification

The 3 months correlation between Unitech and Kunyue is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Unitech Computer Co and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development and Unitech Computer 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 Unitech Computer Co are associated (or correlated) with Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Unitech Computer i.e., Unitech Computer and Kunyue Development go up and down completely randomly.

Pair Corralation between Unitech Computer and Kunyue Development

Assuming the 90 days trading horizon Unitech Computer Co is expected to under-perform the Kunyue Development. But the stock apears to be less risky and, when comparing its historical volatility, Unitech Computer Co is 2.04 times less risky than Kunyue Development. The stock trades about -0.14 of its potential returns per unit of risk. The Kunyue Development Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,985  in Kunyue Development Co on September 21, 2024 and sell it today you would earn a total of  105.00  from holding Kunyue Development Co or generate 2.63% return on investment over 90 days.

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

Unitech Computer Co  vs.  Kunyue Development Co

Unitech Computer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unitech Computer Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Unitech Computer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kunyue Development

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kunyue Development Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kunyue Development 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 Unitech Computer and Kunyue Development

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

The idea behind Unitech Computer Co and Kunyue Development 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.