Correlation Between UHF Logistics and A1

Can any of the company-specific risk be diversified away by investing in both UHF Logistics and A1 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 UHF Logistics and A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UHF Logistics Group and A1 Group, you can compare the effects of market volatilities on UHF Logistics and A1 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 UHF Logistics with a short position of A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of UHF Logistics and A1.

Diversification Opportunities for UHF Logistics and A1

0.06

Correlation Coefficient

UHF Logistics  A1

Significant diversification

The 3 months correlation between UHF and A1 is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding UHF Logistics Group and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group and UHF Logistics 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 UHF Logistics Group are associated (or correlated) with A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of UHF Logistics i.e., UHF Logistics and A1 go up and down completely randomly.

Pair Corralation between UHF Logistics and A1

Given the investment horizon of 90 days UHF Logistics Group is expected to generate 1.8 times more return on investment than A1. However, UHF Logistics is 1.8 times more volatile than A1 Group. It trades about 0.08 of its potential returns per unit of risk. A1 Group is currently generating about 0.03 per unit of risk. If you would invest  8.11  in UHF Logistics Group on December 25, 2024 and sell it today you would lose (2.11) from holding UHF Logistics Group or give up 26.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

UHF Logistics Group  vs.  A1 Group

UHF Logistics Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UHF Logistics Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, UHF Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

A1 Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in A1 Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, A1 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UHF Logistics and A1

The main advantage of trading using opposite UHF Logistics and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UHF Logistics position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.

The idea behind UHF Logistics Group and A1 Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.