Correlation Between China Natural and UTStarcom Holdings

Can any of the company-specific risk be diversified away by investing in both China Natural and UTStarcom Holdings 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 China Natural and UTStarcom Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Natural Resources and UTStarcom Holdings Corp, you can compare the effects of market volatilities on China Natural and UTStarcom Holdings 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 China Natural with a short position of UTStarcom Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and UTStarcom Holdings.

Diversification Opportunities for China Natural and UTStarcom Holdings

0.57

Correlation Coefficient

China Natural  UTStarcom Holdings

Very weak diversification

The 3 months correlation between China and UTStarcom is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Resources and UTStarcom Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTStarcom Holdings Corp and China Natural 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 China Natural Resources are associated (or correlated) with UTStarcom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTStarcom Holdings Corp has no effect on the direction of China Natural i.e., China Natural and UTStarcom Holdings go up and down completely randomly.

Pair Corralation between China Natural and UTStarcom Holdings

Given the investment horizon of 90 days China Natural Resources is expected to generate 1.47 times more return on investment than UTStarcom Holdings. However, China Natural is 1.47 times more volatile than UTStarcom Holdings Corp. It trades about 0.0 of its potential returns per unit of risk. UTStarcom Holdings Corp is currently generating about -0.04 per unit of risk. If you would invest  65.00  in China Natural Resources on December 29, 2024 and sell it today you would lose (5.00) from holding China Natural Resources or give up 7.69% of portfolio value over 90 days.

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

China Natural Resources  vs.  UTStarcom Holdings Corp

China Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, China Natural is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

UTStarcom Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days UTStarcom Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with China Natural and UTStarcom Holdings

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

The idea behind China Natural Resources and UTStarcom Holdings Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.