Correlation Between Astoria Investments and Universal Partners

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

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

Diversification Opportunities for Astoria Investments and Universal Partners

0.28

Correlation Coefficient

Astoria Investments  Universal Partners

Modest diversification

The 3 months correlation between Astoria and Universal is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments and Universal Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Partners and Astoria Investments 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 Astoria Investments are associated (or correlated) with Universal Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Partners has no effect on the direction of Astoria Investments i.e., Astoria Investments and Universal Partners go up and down completely randomly.

Pair Corralation between Astoria Investments and Universal Partners

Assuming the 90 days trading horizon Astoria Investments is expected to generate 1.49 times more return on investment than Universal Partners. However, Astoria Investments is 1.49 times more volatile than Universal Partners. It trades about 0.02 of its potential returns per unit of risk. Universal Partners is currently generating about 0.0 per unit of risk. If you would invest  76,000  in Astoria Investments on September 23, 2024 and sell it today you would earn a total of  9,000  from holding Astoria Investments or generate 11.84% return on investment over 90 days.

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

Astoria Investments  vs.  Universal Partners

Astoria Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Universal Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Universal Partners is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Astoria Investments and Universal Partners

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

The idea behind Astoria Investments and Universal Partners 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.