Correlation Between Action Electronics and U Tech

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

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

Diversification Opportunities for Action Electronics and U Tech

0.63

Correlation Coefficient

Action Electronics  U Tech

Poor diversification

The 3 months correlation between Action and 3050 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Action Electronics Co and U Tech Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Tech Media and Action Electronics 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 Action Electronics Co are associated (or correlated) with U Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Tech Media has no effect on the direction of Action Electronics i.e., Action Electronics and U Tech go up and down completely randomly.

Pair Corralation between Action Electronics and U Tech

Assuming the 90 days trading horizon Action Electronics Co is expected to generate 0.94 times more return on investment than U Tech. However, Action Electronics Co is 1.06 times less risky than U Tech. It trades about 0.02 of its potential returns per unit of risk. U Tech Media Corp is currently generating about 0.01 per unit of risk. If you would invest  1,490  in Action Electronics Co on December 22, 2024 and sell it today you would earn a total of  215.00  from holding Action Electronics Co or generate 14.43% return on investment over 90 days.

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

Action Electronics Co  vs.  U Tech Media Corp

Action Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Action 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

U Tech Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days U Tech Media Corp 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 Action Electronics and U Tech

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

The idea behind Action Electronics Co and U Tech Media 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.