Correlation Between Mistras and Universal Security

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Can any of the company-specific risk be diversified away by investing in both Mistras 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 Mistras and Universal Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mistras Group and Universal Security Instruments, you can compare the effects of market volatilities on Mistras 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 Mistras with a short position of Universal Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mistras and Universal Security.

Diversification Opportunities for Mistras and Universal Security

-0.92
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Mistras and Universal is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Universal Security Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Security and Mistras 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 Mistras Group 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 Mistras i.e., Mistras and Universal Security go up and down completely randomly.

Pair Corralation between Mistras and Universal Security

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 0.54 times more return on investment than Universal Security. However, Mistras Group is 1.85 times less risky than Universal Security. It trades about 0.06 of its potential returns per unit of risk. Universal Security Instruments is currently generating about 0.03 per unit of risk. If you would invest  537.00  in Mistras Group on October 23, 2024 and sell it today you would earn a total of  457.00  from holding Mistras Group or generate 85.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Mistras Group  vs.  Universal Security Instruments

 Performance 
       Timeline  
Mistras Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Universal Security 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.

Mistras and Universal Security Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mistras and Universal Security

The main advantage of trading using opposite Mistras and Universal Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mistras 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 Mistras Group 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.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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