Correlation Between Unimit Engineering and Megachem Public

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

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

Diversification Opportunities for Unimit Engineering and Megachem Public

0.75

Correlation Coefficient

Unimit Engineering  Megachem Public

Poor diversification

The 3 months correlation between Unimit and Megachem is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Unimit Engineering Public and Megachem Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megachem Public and Unimit Engineering 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 Unimit Engineering Public are associated (or correlated) with Megachem Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megachem Public has no effect on the direction of Unimit Engineering i.e., Unimit Engineering and Megachem Public go up and down completely randomly.

Pair Corralation between Unimit Engineering and Megachem Public

Assuming the 90 days trading horizon Unimit Engineering Public is expected to under-perform the Megachem Public. In addition to that, Unimit Engineering is 1.58 times more volatile than Megachem Public. It trades about -0.28 of its total potential returns per unit of risk. Megachem Public is currently generating about -0.12 per unit of volatility. If you would invest  202.00  in Megachem Public on October 19, 2024 and sell it today you would lose (11.00) from holding Megachem Public or give up 5.45% of portfolio value over 90 days.

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

Unimit Engineering Public  vs.  Megachem Public

Unimit Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unimit Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Megachem Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megachem Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Unimit Engineering and Megachem Public

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

The idea behind Unimit Engineering Public and Megachem Public 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.