Correlation Between Ituran Location and UTStarcom Holdings

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

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

Diversification Opportunities for Ituran Location and UTStarcom Holdings

-0.19

Correlation Coefficient

Ituran Location  UTStarcom Holdings

Good diversification

The 3 months correlation between Ituran and UTStarcom is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and 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 Ituran Location 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 Ituran Location and 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 Ituran Location i.e., Ituran Location and UTStarcom Holdings go up and down completely randomly.

Pair Corralation between Ituran Location and UTStarcom Holdings

Given the investment horizon of 90 days Ituran Location and is expected to generate 0.35 times more return on investment than UTStarcom Holdings. However, Ituran Location and is 2.84 times less risky than UTStarcom Holdings. It trades about 0.18 of its potential returns per unit of risk. UTStarcom Holdings Corp is currently generating about 0.0 per unit of risk. If you would invest  2,670  in Ituran Location and on September 12, 2024 and sell it today you would earn a total of  433.00  from holding Ituran Location and or generate 16.22% return on investment over 90 days.

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

Ituran Location and  vs.  UTStarcom Holdings Corp

Ituran Location

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

UTStarcom Holdings Corp

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, UTStarcom Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ituran Location and UTStarcom Holdings

The main advantage of trading using opposite Ituran Location and UTStarcom Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ituran Location 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 Ituran Location and 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.