Correlation Between Uchi Technologies and Hengyuan Refining

Can any of the company-specific risk be diversified away by investing in both Uchi Technologies and Hengyuan Refining 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 Uchi Technologies and Hengyuan Refining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Uchi Technologies Bhd and Hengyuan Refining, you can compare the effects of market volatilities on Uchi Technologies and Hengyuan Refining 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 Uchi Technologies with a short position of Hengyuan Refining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uchi Technologies and Hengyuan Refining.

Diversification Opportunities for Uchi Technologies and Hengyuan Refining

-0.57

Correlation Coefficient

Uchi Technologies  Hengyuan Refining

Excellent diversification

The 3 months correlation between Uchi and Hengyuan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Uchi Technologies Bhd and Hengyuan Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengyuan Refining and Uchi Technologies 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 Uchi Technologies Bhd are associated (or correlated) with Hengyuan Refining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengyuan Refining has no effect on the direction of Uchi Technologies i.e., Uchi Technologies and Hengyuan Refining go up and down completely randomly.

Pair Corralation between Uchi Technologies and Hengyuan Refining

Assuming the 90 days trading horizon Uchi Technologies Bhd is expected to generate 0.3 times more return on investment than Hengyuan Refining. However, Uchi Technologies Bhd is 3.32 times less risky than Hengyuan Refining. It trades about 0.03 of its potential returns per unit of risk. Hengyuan Refining is currently generating about -0.04 per unit of risk. If you would invest  383.00  in Uchi Technologies Bhd on October 10, 2024 and sell it today you would earn a total of  11.00  from holding Uchi Technologies Bhd or generate 2.87% return on investment over 90 days.

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

Uchi Technologies Bhd  vs.  Hengyuan Refining

Uchi Technologies Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uchi Technologies Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Uchi Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hengyuan Refining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hengyuan Refining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Uchi Technologies and Hengyuan Refining

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

The idea behind Uchi Technologies Bhd and Hengyuan Refining 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 Stocks Directory module to find actively traded stocks across global markets.