Correlation Between IFabric Corp and Unisync Corp

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

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

Diversification Opportunities for IFabric Corp and Unisync Corp

-0.05

Correlation Coefficient

IFabric Corp  Unisync Corp

Good diversification

The 3 months correlation between IFabric and Unisync is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding iFabric Corp and Unisync Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisync Corp and IFabric Corp 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 iFabric Corp are associated (or correlated) with Unisync Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisync Corp has no effect on the direction of IFabric Corp i.e., IFabric Corp and Unisync Corp go up and down completely randomly.

Pair Corralation between IFabric Corp and Unisync Corp

Assuming the 90 days trading horizon iFabric Corp is expected to under-perform the Unisync Corp. But the stock apears to be less risky and, when comparing its historical volatility, iFabric Corp is 1.15 times less risky than Unisync Corp. The stock trades about -0.05 of its potential returns per unit of risk. The Unisync Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  139.00  in Unisync Corp on September 14, 2024 and sell it today you would earn a total of  26.00  from holding Unisync Corp or generate 18.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

iFabric Corp  vs.  Unisync Corp

iFabric Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iFabric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Unisync Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unisync Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Unisync Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IFabric Corp and Unisync Corp

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

The idea behind iFabric Corp and Unisync 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.