Correlation Between Huang Hsiang and Universal Cement

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

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

Diversification Opportunities for Huang Hsiang and Universal Cement

-0.19

Correlation Coefficient

Huang Hsiang  Universal Cement

Good diversification

The 3 months correlation between Huang and Universal is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and Universal Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Cement Corp and Huang Hsiang 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 Huang Hsiang Construction are associated (or correlated) with Universal Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Cement Corp has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and Universal Cement go up and down completely randomly.

Pair Corralation between Huang Hsiang and Universal Cement

Assuming the 90 days trading horizon Huang Hsiang Construction is expected to under-perform the Universal Cement. But the stock apears to be less risky and, when comparing its historical volatility, Huang Hsiang Construction is 1.09 times less risky than Universal Cement. The stock trades about -0.24 of its potential returns per unit of risk. The Universal Cement Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,780  in Universal Cement Corp on October 16, 2024 and sell it today you would lose (70.00) from holding Universal Cement Corp or give up 2.52% of portfolio value over 90 days.

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

Huang Hsiang Construction  vs.  Universal Cement Corp

Huang Hsiang Construction

Risk-Adjusted Performance

0 of 100

Weak

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

Universal Cement Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Cement Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Huang Hsiang and Universal Cement

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

The idea behind Huang Hsiang Construction and Universal Cement 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.