Correlation Between Asia Metal and Unitech Computer

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Can any of the company-specific risk be diversified away by investing in both Asia Metal 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 Asia Metal and Unitech Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Metal Industries and Unitech Computer Co, you can compare the effects of market volatilities on Asia Metal 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 Asia Metal with a short position of Unitech Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Unitech Computer.

Diversification Opportunities for Asia Metal and Unitech Computer

AsiaUnitechDiversified AwayAsiaUnitechDiversified Away100%
0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Asia and Unitech is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Computer and Asia Metal 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 Asia Metal Industries 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 Asia Metal i.e., Asia Metal and Unitech Computer go up and down completely randomly.

Pair Corralation between Asia Metal and Unitech Computer

Assuming the 90 days trading horizon Asia Metal Industries is expected to generate 2.04 times more return on investment than Unitech Computer. However, Asia Metal is 2.04 times more volatile than Unitech Computer Co. It trades about -0.05 of its potential returns per unit of risk. Unitech Computer Co is currently generating about -0.11 per unit of risk. If you would invest  8,180  in Asia Metal Industries on November 15, 2024 and sell it today you would lose (530.00) from holding Asia Metal Industries or give up 6.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Asia Metal Industries  vs.  Unitech Computer Co

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-50510
JavaScript chart by amCharts 3.21.156727 2414
       Timeline  
Asia Metal Industries 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Asia Metal Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Asia Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb75808590
Unitech Computer 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Unitech Computer Co 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb35363738394041

Asia Metal and Unitech Computer Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.18-3.13-2.08-1.03-0.01650.961.942.933.924.91 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.156727 2414
       Returns  

Pair Trading with Asia Metal and Unitech Computer

The main advantage of trading using opposite Asia Metal and Unitech Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal 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 Asia Metal Industries 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 .

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