Correlation Between United Radiant and Chernan Metal

Can any of the company-specific risk be diversified away by investing in both United Radiant and Chernan Metal 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 Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on United Radiant and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Radiant and Chernan Metal.

Diversification Opportunities for United Radiant and Chernan Metal

0.4

Correlation Coefficient

United Radiant  Chernan Metal

Very weak diversification

The 3 months correlation between United and Chernan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Radiant Technology and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of United Radiant i.e., United Radiant and Chernan Metal go up and down completely randomly.

Pair Corralation between United Radiant and Chernan Metal

Assuming the 90 days trading horizon United Radiant Technology is expected to generate 0.71 times more return on investment than Chernan Metal. However, United Radiant Technology is 1.41 times less risky than Chernan Metal. It trades about 0.12 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.02 per unit of risk. If you would invest  2,075  in United Radiant Technology on December 23, 2024 and sell it today you would earn a total of  230.00  from holding United Radiant Technology or generate 11.08% return on investment over 90 days.

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

United Radiant Technology  vs.  Chernan Metal Industrial

United Radiant Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Radiant Technology are ranked lower than 9 (%) 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 April 2025.

Chernan Metal Industrial

Risk-Adjusted Performance

Weak

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

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

The idea behind United Radiant Technology and Chernan Metal Industrial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.