Correlation Between UET United and Hawesko Holding

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

Diversification Opportunities for UET United and Hawesko Holding

-0.25

Correlation Coefficient

UET United  Hawesko Holding

Very good diversification

The 3 months correlation between UET and Hawesko is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG 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 Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of UET United i.e., UET United and Hawesko Holding go up and down completely randomly.

Pair Corralation between UET United and Hawesko Holding

Assuming the 90 days trading horizon UET United Electronic is expected to under-perform the Hawesko Holding. But the stock apears to be less risky and, when comparing its historical volatility, UET United Electronic is 1.49 times less risky than Hawesko Holding. The stock trades about -0.06 of its potential returns per unit of risk. The Hawesko Holding AG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,270  in Hawesko Holding AG on October 11, 2024 and sell it today you would earn a total of  300.00  from holding Hawesko Holding AG or generate 13.22% 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.  Hawesko Holding AG

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.

Hawesko Holding AG

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hawesko Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hawesko Holding 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 Hawesko Holding

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

The idea behind UET United Electronic and Hawesko Holding AG 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.