Correlation Between Aba Chemicals and UCloud Technology

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

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

Diversification Opportunities for Aba Chemicals and UCloud Technology

0.64

Correlation Coefficient

Aba Chemicals  UCloud Technology

Poor diversification

The 3 months correlation between Aba and UCloud is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aba Chemicals Corp and UCloud Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCloud Technology and Aba Chemicals 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 Aba Chemicals Corp are associated (or correlated) with UCloud Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UCloud Technology has no effect on the direction of Aba Chemicals i.e., Aba Chemicals and UCloud Technology go up and down completely randomly.

Pair Corralation between Aba Chemicals and UCloud Technology

Assuming the 90 days trading horizon Aba Chemicals Corp is expected to under-perform the UCloud Technology. But the stock apears to be less risky and, when comparing its historical volatility, Aba Chemicals Corp is 1.17 times less risky than UCloud Technology. The stock trades about -0.02 of its potential returns per unit of risk. The UCloud Technology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,583  in UCloud Technology Co on October 22, 2024 and sell it today you would lose (249.00) from holding UCloud Technology Co or give up 15.73% of portfolio value over 90 days.

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

Aba Chemicals Corp  vs.  UCloud Technology Co

Aba Chemicals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aba Chemicals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aba Chemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UCloud Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UCloud Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UCloud Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aba Chemicals and UCloud Technology

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

The idea behind Aba Chemicals Corp and UCloud Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.