Correlation Between I Sheng and Unitech Computer

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

By analyzing existing cross correlation between I Sheng Electric Wire and Unitech Computer Co, you can compare the effects of market volatilities on I Sheng and Unitech Computer 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 I Sheng with a short position of Unitech Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Sheng and Unitech Computer.

Diversification Opportunities for I Sheng and Unitech Computer

0.42

Correlation Coefficient

I Sheng  Unitech Computer

Very weak diversification

The 3 months correlation between 6115 and Unitech is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding I Sheng Electric Wire and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Computer and I Sheng 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 I Sheng Electric Wire are associated (or correlated) with Unitech Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Computer has no effect on the direction of I Sheng i.e., I Sheng and Unitech Computer go up and down completely randomly.

Pair Corralation between I Sheng and Unitech Computer

Assuming the 90 days trading horizon I Sheng is expected to generate 4.25 times less return on investment than Unitech Computer. But when comparing it to its historical volatility, I Sheng Electric Wire is 2.51 times less risky than Unitech Computer. It trades about 0.05 of its potential returns per unit of risk. Unitech Computer Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,480  in Unitech Computer Co on September 13, 2024 and sell it today you would earn a total of  200.00  from holding Unitech Computer Co or generate 5.75% return on investment over 90 days.

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

I Sheng Electric Wire  vs.  Unitech Computer Co

I Sheng Electric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in I Sheng Electric Wire are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, I Sheng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Unitech Computer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unitech Computer Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Unitech Computer 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 I Sheng and Unitech Computer

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

The idea behind I Sheng Electric Wire and Unitech Computer 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .