Correlation Between Leader Steel and Uwc Bhd

Can any of the company-specific risk be diversified away by investing in both Leader Steel and Uwc Bhd 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 Leader Steel and Uwc Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Leader Steel and Uwc Bhd

-0.65

Correlation Coefficient

Leader Steel  Uwc Bhd

Excellent diversification

The 3 months correlation between Leader and Uwc is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings and Uwc Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uwc Bhd and Leader Steel 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 Leader Steel Holdings are associated (or correlated) with Uwc Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uwc Bhd has no effect on the direction of Leader Steel i.e., Leader Steel and Uwc Bhd go up and down completely randomly.

Pair Corralation between Leader Steel and Uwc Bhd

Assuming the 90 days trading horizon Leader Steel Holdings is expected to generate 1.63 times more return on investment than Uwc Bhd. However, Leader Steel is 1.63 times more volatile than Uwc Bhd. It trades about 0.01 of its potential returns per unit of risk. Uwc Bhd is currently generating about -0.01 per unit of risk. If you would invest  49.00  in Leader Steel Holdings on October 5, 2024 and sell it today you would lose (9.00) from holding Leader Steel Holdings or give up 18.37% of portfolio value over 90 days.

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

Leader Steel Holdings  vs.  Uwc Bhd

Leader Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leader Steel Holdings 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.

Uwc Bhd

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Uwc Bhd are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Uwc Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leader Steel and Uwc Bhd

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

The idea behind Leader Steel Holdings and Uwc Bhd 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.