Correlation Between Rafael Microelectronics and Universal Vision

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

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

Diversification Opportunities for Rafael Microelectronics and Universal Vision

0.61

Correlation Coefficient

Rafael Microelectronics  Universal Vision

Poor diversification

The 3 months correlation between Rafael and Universal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Microelectronics and Universal Vision Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Vision Bio and Rafael Microelectronics 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 Rafael Microelectronics are associated (or correlated) with Universal Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Vision Bio has no effect on the direction of Rafael Microelectronics i.e., Rafael Microelectronics and Universal Vision go up and down completely randomly.

Pair Corralation between Rafael Microelectronics and Universal Vision

Assuming the 90 days trading horizon Rafael Microelectronics is expected to generate 2.17 times more return on investment than Universal Vision. However, Rafael Microelectronics is 2.17 times more volatile than Universal Vision Biotechnology. It trades about 0.15 of its potential returns per unit of risk. Universal Vision Biotechnology is currently generating about -0.1 per unit of risk. If you would invest  12,550  in Rafael Microelectronics on October 11, 2024 and sell it today you would earn a total of  950.00  from holding Rafael Microelectronics or generate 7.57% return on investment over 90 days.

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

Rafael Microelectronics  vs.  Universal Vision Biotechnology

Rafael Microelectronics

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Microelectronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rafael Microelectronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Universal Vision Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Vision Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Rafael Microelectronics and Universal Vision

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

The idea behind Rafael Microelectronics and Universal Vision Biotechnology 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.