Correlation Between RF Materials and UNISEM

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

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

Diversification Opportunities for RF Materials and UNISEM

0.65

Correlation Coefficient

RF Materials  UNISEM

Poor diversification

The 3 months correlation between 327260 and UNISEM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM and RF Materials 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 RF Materials Co are associated (or correlated) with UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of RF Materials i.e., RF Materials and UNISEM go up and down completely randomly.

Pair Corralation between RF Materials and UNISEM

Assuming the 90 days trading horizon RF Materials Co is expected to under-perform the UNISEM. But the stock apears to be less risky and, when comparing its historical volatility, RF Materials Co is 1.13 times less risky than UNISEM. The stock trades about -0.07 of its potential returns per unit of risk. The UNISEM Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  814,685  in UNISEM Co on October 7, 2024 and sell it today you would lose (201,685) from holding UNISEM Co or give up 24.76% of portfolio value over 90 days.

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

RF Materials Co  vs.  UNISEM Co

RF Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RF Materials Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

UNISEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNISEM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RF Materials and UNISEM

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

The idea behind RF Materials Co and UNISEM 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.