Correlation Between Universal Scientific and Guangxi Guiguan

Can any of the company-specific risk be diversified away by investing in both Universal Scientific and Guangxi Guiguan 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 Guangxi Guiguan 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 Guangxi Guiguan Electric, you can compare the effects of market volatilities on Universal Scientific and Guangxi Guiguan 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 Guangxi Guiguan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Scientific and Guangxi Guiguan.

Diversification Opportunities for Universal Scientific and Guangxi Guiguan

0.11

Correlation Coefficient

Universal Scientific  Guangxi Guiguan

Average diversification

The 3 months correlation between Universal and Guangxi is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Universal Scientific Industria and Guangxi Guiguan Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Guiguan Electric 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 Guangxi Guiguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Guiguan Electric has no effect on the direction of Universal Scientific i.e., Universal Scientific and Guangxi Guiguan go up and down completely randomly.

Pair Corralation between Universal Scientific and Guangxi Guiguan

Assuming the 90 days trading horizon Universal Scientific is expected to generate 1.01 times less return on investment than Guangxi Guiguan. In addition to that, Universal Scientific is 1.39 times more volatile than Guangxi Guiguan Electric. It trades about 0.01 of its total potential returns per unit of risk. Guangxi Guiguan Electric is currently generating about 0.02 per unit of volatility. If you would invest  624.00  in Guangxi Guiguan Electric on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Guangxi Guiguan Electric or generate 0.8% return on investment over 90 days.

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

Universal Scientific Industria  vs.  Guangxi Guiguan Electric

Universal Scientific

Risk-Adjusted Performance

0 of 100

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.

Guangxi Guiguan Electric

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangxi Guiguan Electric are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guangxi Guiguan 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 Guangxi Guiguan

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

The idea behind Universal Scientific Industrial and Guangxi Guiguan Electric 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.