Correlation Between Servyou Software and UE Furniture

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

By analyzing existing cross correlation between Servyou Software Group and UE Furniture Co, you can compare the effects of market volatilities on Servyou Software and UE Furniture 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 Servyou Software with a short position of UE Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Servyou Software and UE Furniture.

Diversification Opportunities for Servyou Software and UE Furniture

-0.2

Correlation Coefficient

Servyou Software  UE Furniture

Good diversification

The 3 months correlation between Servyou and 603600 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Servyou Software Group and UE Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UE Furniture and Servyou Software 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 Servyou Software Group are associated (or correlated) with UE Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UE Furniture has no effect on the direction of Servyou Software i.e., Servyou Software and UE Furniture go up and down completely randomly.

Pair Corralation between Servyou Software and UE Furniture

Assuming the 90 days trading horizon Servyou Software Group is expected to generate 1.46 times more return on investment than UE Furniture. However, Servyou Software is 1.46 times more volatile than UE Furniture Co. It trades about 0.03 of its potential returns per unit of risk. UE Furniture Co is currently generating about 0.01 per unit of risk. If you would invest  2,882  in Servyou Software Group on October 26, 2024 and sell it today you would earn a total of  62.00  from holding Servyou Software Group or generate 2.15% return on investment over 90 days.

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

Servyou Software Group  vs.  UE Furniture Co

Servyou Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Servyou Software Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Servyou Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

UE Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Servyou Software and UE Furniture

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

The idea behind Servyou Software Group and UE Furniture 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.