Correlation Between Infinera and Universal Security

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

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

Diversification Opportunities for Infinera and Universal Security

-0.67

Correlation Coefficient

Infinera  Universal Security

Excellent diversification

The 3 months correlation between Infinera and Universal is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Infinera and Universal Security Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Security and Infinera 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 Infinera 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 Infinera i.e., Infinera and Universal Security go up and down completely randomly.

Pair Corralation between Infinera and Universal Security

Given the investment horizon of 90 days Infinera is expected to generate 0.13 times more return on investment than Universal Security. However, Infinera is 7.5 times less risky than Universal Security. It trades about 0.05 of its potential returns per unit of risk. Universal Security Instruments is currently generating about -0.09 per unit of risk. If you would invest  659.00  in Infinera on December 21, 2024 and sell it today you would earn a total of  5.00  from holding Infinera or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.0%
Values	Daily Returns

Infinera  vs.  Universal Security Instruments

Infinera

Risk-Adjusted Performance

Insignificant

Over the last 90 days Infinera has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Infinera is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Universal Security

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Security Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Infinera and Universal Security

The main advantage of trading using opposite Infinera and Universal Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infinera 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 Infinera 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.