Correlation Between Acme United and Universal Technical

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

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

Diversification Opportunities for Acme United and Universal Technical

0.13

Correlation Coefficient

Acme United  Universal Technical

Average diversification

The 3 months correlation between Acme and Universal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Universal Technical Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Technical and Acme United 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 Acme United are associated (or correlated) with Universal Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Technical has no effect on the direction of Acme United i.e., Acme United and Universal Technical go up and down completely randomly.

Pair Corralation between Acme United and Universal Technical

Considering the 90-day investment horizon Acme United is expected to generate 0.67 times more return on investment than Universal Technical. However, Acme United is 1.49 times less risky than Universal Technical. It trades about 0.09 of its potential returns per unit of risk. Universal Technical Institute is currently generating about 0.0 per unit of risk. If you would invest  3,642  in Acme United on December 28, 2024 and sell it today you would earn a total of  375.00  from holding Acme United or generate 10.3% return on investment over 90 days.

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

Acme United  vs.  Universal Technical Institute

Acme United

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acme United are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Acme United may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Universal Technical

Risk-Adjusted Performance

Weak

Over the last 90 days Universal Technical Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Universal Technical is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Acme United and Universal Technical

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

The idea behind Acme United and Universal Technical Institute 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 Global Correlations module to find global opportunities by holding instruments from different markets.