Correlation Between Unitech Electronics and Excellence Optoelectronic

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

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

Diversification Opportunities for Unitech Electronics and Excellence Optoelectronic

0.29

Correlation Coefficient

Unitech Electronics  Excellence Optoelectronic

Modest diversification

The 3 months correlation between Unitech and Excellence is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Unitech Electronics Co and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic and Unitech 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 Unitech Electronics Co are associated (or correlated) with Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of Unitech Electronics i.e., Unitech Electronics and Excellence Optoelectronic go up and down completely randomly.

Pair Corralation between Unitech Electronics and Excellence Optoelectronic

Assuming the 90 days trading horizon Unitech Electronics Co is expected to generate 1.27 times more return on investment than Excellence Optoelectronic. However, Unitech Electronics is 1.27 times more volatile than Excellence Optoelectronic. It trades about 0.05 of its potential returns per unit of risk. Excellence Optoelectronic is currently generating about 0.03 per unit of risk. If you would invest  2,174  in Unitech Electronics Co on October 4, 2024 and sell it today you would earn a total of  1,656  from holding Unitech Electronics Co or generate 76.17% return on investment over 90 days.

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

Unitech Electronics Co  vs.  Excellence Optoelectronic

Unitech Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unitech Electronics Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Unitech Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Excellence Optoelectronic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Unitech Electronics and Excellence Optoelectronic

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

The idea behind Unitech Electronics Co and Excellence Optoelectronic 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.