Correlation Between Universal Scientific and Bosera CMSK

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

By analyzing existing cross correlation between Universal Scientific Industrial and Bosera CMSK Industrial, you can compare the effects of market volatilities on Universal Scientific and Bosera CMSK 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 Universal Scientific with a short position of Bosera CMSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Scientific and Bosera CMSK.

Diversification Opportunities for Universal Scientific and Bosera CMSK

0.51

Correlation Coefficient

Universal Scientific  Bosera CMSK

Very weak diversification

The 3 months correlation between Universal and Bosera is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Universal Scientific Industria and Bosera CMSK Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosera CMSK Industrial and Universal Scientific 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 Universal Scientific Industrial are associated (or correlated) with Bosera CMSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosera CMSK Industrial has no effect on the direction of Universal Scientific i.e., Universal Scientific and Bosera CMSK go up and down completely randomly.

Pair Corralation between Universal Scientific and Bosera CMSK

Assuming the 90 days trading horizon Universal Scientific Industrial is expected to generate 2.94 times more return on investment than Bosera CMSK. However, Universal Scientific is 2.94 times more volatile than Bosera CMSK Industrial. It trades about 0.04 of its potential returns per unit of risk. Bosera CMSK Industrial is currently generating about 0.1 per unit of risk. If you would invest  1,517  in Universal Scientific Industrial on October 4, 2024 and sell it today you would earn a total of  133.00  from holding Universal Scientific Industrial or generate 8.77% return on investment over 90 days.

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

Universal Scientific Industria  vs.  Bosera CMSK Industrial

Universal Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Scientific Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Universal Scientific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bosera CMSK Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bosera CMSK Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bosera CMSK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Scientific and Bosera CMSK

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

The idea behind Universal Scientific Industrial and Bosera CMSK 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.