Correlation Between Harmonic and Universal Security

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

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

Diversification Opportunities for Harmonic and Universal Security

-0.46

Correlation Coefficient

Harmonic  Universal Security

Very good diversification

The 3 months correlation between Harmonic and Universal is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Harmonic and Universal Security Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Security and Harmonic 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 Harmonic are associated (or correlated) with Universal Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Security has no effect on the direction of Harmonic i.e., Harmonic and Universal Security go up and down completely randomly.

Pair Corralation between Harmonic and Universal Security

Given the investment horizon of 90 days Harmonic is expected to under-perform the Universal Security. But the stock apears to be less risky and, when comparing its historical volatility, Harmonic is 1.81 times less risky than Universal Security. The stock trades about -0.04 of its potential returns per unit of risk. The Universal Security Instruments is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Universal Security Instruments on October 23, 2024 and sell it today you would earn a total of  107.00  from holding Universal Security Instruments or generate 86.29% return on investment over 90 days.

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

Harmonic  vs.  Universal Security Instruments

Harmonic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmonic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Universal Security

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Security Instruments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Universal Security unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmonic and Universal Security

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

The idea behind Harmonic and Universal Security Instruments 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.