Correlation Between Impex Ferro and Unitech

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

By analyzing existing cross correlation between Impex Ferro Tech and Unitech Limited, you can compare the effects of market volatilities on Impex Ferro and Unitech 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 Impex Ferro with a short position of Unitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impex Ferro and Unitech.

Diversification Opportunities for Impex Ferro and Unitech

0.51

Correlation Coefficient

Impex Ferro  Unitech

Very weak diversification

The 3 months correlation between Impex and Unitech is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Impex Ferro Tech and Unitech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Limited and Impex Ferro 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 Impex Ferro Tech are associated (or correlated) with Unitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Limited has no effect on the direction of Impex Ferro i.e., Impex Ferro and Unitech go up and down completely randomly.

Pair Corralation between Impex Ferro and Unitech

Assuming the 90 days trading horizon Impex Ferro Tech is expected to under-perform the Unitech. But the stock apears to be less risky and, when comparing its historical volatility, Impex Ferro Tech is 1.28 times less risky than Unitech. The stock trades about -0.13 of its potential returns per unit of risk. The Unitech Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Unitech Limited on September 15, 2024 and sell it today you would earn a total of  12.00  from holding Unitech Limited or generate 1.2% return on investment over 90 days.

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

Impex Ferro Tech  vs.  Unitech Limited

Impex Ferro Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impex Ferro Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Unitech Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unitech Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Unitech is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Impex Ferro and Unitech

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

The idea behind Impex Ferro Tech and Unitech Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.