Correlation Between UET United and Virtu Financial

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

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

Diversification Opportunities for UET United and Virtu Financial

0.68

Correlation Coefficient

UET United  Virtu Financial

Poor diversification

The 3 months correlation between UET and Virtu is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and UET 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 UET United Electronic are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of UET United i.e., UET United and Virtu Financial go up and down completely randomly.

Pair Corralation between UET United and Virtu Financial

Assuming the 90 days trading horizon UET United Electronic is expected to generate 3.43 times more return on investment than Virtu Financial. However, UET United is 3.43 times more volatile than Virtu Financial. It trades about 0.19 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.08 per unit of risk. If you would invest  94.00  in UET United Electronic on October 11, 2024 and sell it today you would earn a total of  20.00  from holding UET United Electronic or generate 21.28% return on investment over 90 days.

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

UET United Electronic  vs.  Virtu Financial

UET United Electronic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UET United Electronic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, UET United unveiled solid returns over the last few months and may actually be approaching a breakup point.

Virtu Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Virtu Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UET United and Virtu Financial

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

The idea behind UET United Electronic and Virtu Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..