Correlation Between United Radiant and Advantech

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

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

Diversification Opportunities for United Radiant and Advantech

0.7

Correlation Coefficient

United Radiant  Advantech

Poor diversification

The 3 months correlation between United and Advantech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding United Radiant Technology and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and United Radiant 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 United Radiant Technology are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of United Radiant i.e., United Radiant and Advantech go up and down completely randomly.

Pair Corralation between United Radiant and Advantech

Assuming the 90 days trading horizon United Radiant Technology is expected to generate 0.97 times more return on investment than Advantech. However, United Radiant Technology is 1.03 times less risky than Advantech. It trades about 0.03 of its potential returns per unit of risk. Advantech Co is currently generating about 0.01 per unit of risk. If you would invest  1,665  in United Radiant Technology on September 23, 2024 and sell it today you would earn a total of  355.00  from holding United Radiant Technology or generate 21.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

United Radiant Technology  vs.  Advantech Co

United Radiant Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Radiant Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, United Radiant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Advantech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Advantech 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 United Radiant and Advantech

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

The idea behind United Radiant Technology and Advantech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.