Correlation Between United Hero and WISE KTAM

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

By analyzing existing cross correlation between United Hero ETF and WISE KTAM CSI, you can compare the effects of market volatilities on United Hero and WISE KTAM 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 United Hero with a short position of WISE KTAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Hero and WISE KTAM.

Diversification Opportunities for United Hero and WISE KTAM

-0.04

Correlation Coefficient

United Hero  WISE KTAM

Good diversification

The 3 months correlation between United and WISE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding United Hero ETF and WISE KTAM CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISE KTAM CSI and United Hero 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 United Hero ETF are associated (or correlated) with WISE KTAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISE KTAM CSI has no effect on the direction of United Hero i.e., United Hero and WISE KTAM go up and down completely randomly.

Pair Corralation between United Hero and WISE KTAM

Assuming the 90 days trading horizon United Hero ETF is expected to generate 1.05 times more return on investment than WISE KTAM. However, United Hero is 1.05 times more volatile than WISE KTAM CSI. It trades about -0.03 of its potential returns per unit of risk. WISE KTAM CSI is currently generating about -0.1 per unit of risk. If you would invest  822.00  in United Hero ETF on October 7, 2024 and sell it today you would lose (18.00) from holding United Hero ETF or give up 2.19% of portfolio value over 90 days.

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

United Hero ETF  vs.  WISE KTAM CSI

United Hero ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Hero ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, United Hero sustained solid returns over the last few months and may actually be approaching a breakup point.

WISE KTAM CSI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WISE KTAM CSI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with United Hero and WISE KTAM

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

The idea behind United Hero ETF and WISE KTAM CSI 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.