Correlation Between Shan Loong and Unitech Electronics

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

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

Diversification Opportunities for Shan Loong and Unitech Electronics

0.68

Correlation Coefficient

Shan Loong  Unitech Electronics

Poor diversification

The 3 months correlation between Shan and Unitech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shan Loong Transportation Co and Unitech Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Electronics and Shan Loong 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 Shan Loong Transportation Co are associated (or correlated) with Unitech Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Electronics has no effect on the direction of Shan Loong i.e., Shan Loong and Unitech Electronics go up and down completely randomly.

Pair Corralation between Shan Loong and Unitech Electronics

Assuming the 90 days trading horizon Shan Loong Transportation Co is expected to generate 0.54 times more return on investment than Unitech Electronics. However, Shan Loong Transportation Co is 1.84 times less risky than Unitech Electronics. It trades about -0.17 of its potential returns per unit of risk. Unitech Electronics Co is currently generating about -0.13 per unit of risk. If you would invest  2,020  in Shan Loong Transportation Co on October 24, 2024 and sell it today you would lose (270.00) from holding Shan Loong Transportation Co or give up 13.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Shan Loong Transportation Co  vs.  Unitech Electronics Co

Shan Loong Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shan Loong Transportation Co 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.

Unitech Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unitech Electronics Co 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 Shan Loong and Unitech Electronics

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

The idea behind Shan Loong Transportation Co and Unitech Electronics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..