Correlation Between UET United and ZIM Integrated

Can any of the company-specific risk be diversified away by investing in both UET United and ZIM Integrated 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 ZIM Integrated 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 ZIM Integrated Shipping, you can compare the effects of market volatilities on UET United and ZIM Integrated 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 ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and ZIM Integrated.

Diversification Opportunities for UET United and ZIM Integrated

-0.08

Correlation Coefficient

UET United  ZIM Integrated

Good diversification

The 3 months correlation between UET and ZIM is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of UET United i.e., UET United and ZIM Integrated go up and down completely randomly.

Pair Corralation between UET United and ZIM Integrated

Assuming the 90 days trading horizon UET United Electronic is expected to generate 0.94 times more return on investment than ZIM Integrated. However, UET United Electronic is 1.07 times less risky than ZIM Integrated. It trades about 0.02 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.01 per unit of risk. If you would invest  89.00  in UET United Electronic on December 20, 2024 and sell it today you would earn a total of  0.00  from holding UET United Electronic or generate 0.0% return on investment over 90 days.

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

UET United Electronic  vs.  ZIM Integrated Shipping

UET United Electronic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UET United Electronic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, UET United is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ZIM Integrated Shipping

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ZIM Integrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UET United and ZIM Integrated

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

The idea behind UET United Electronic and ZIM Integrated Shipping 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.