Correlation Between Union Petrochemical and Unique Mining

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

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

Diversification Opportunities for Union Petrochemical and Unique Mining

0.71

Correlation Coefficient

Union Petrochemical  Unique Mining

Poor diversification

The 3 months correlation between Union and Unique is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Union Petrochemical Public and Unique Mining Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unique Mining Services and Union Petrochemical 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 Union Petrochemical Public are associated (or correlated) with Unique Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unique Mining Services has no effect on the direction of Union Petrochemical i.e., Union Petrochemical and Unique Mining go up and down completely randomly.

Pair Corralation between Union Petrochemical and Unique Mining

Assuming the 90 days trading horizon Union Petrochemical Public is expected to under-perform the Unique Mining. But the stock apears to be less risky and, when comparing its historical volatility, Union Petrochemical Public is 1.07 times less risky than Unique Mining. The stock trades about -0.58 of its potential returns per unit of risk. The Unique Mining Services is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Unique Mining Services on October 15, 2024 and sell it today you would lose (3.00) from holding Unique Mining Services or give up 7.32% of portfolio value over 90 days.

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

Union Petrochemical Public  vs.  Unique Mining Services

Union Petrochemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Petrochemical 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 forward-looking signals 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.

Unique Mining Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unique Mining Services 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 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 Union Petrochemical and Unique Mining

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

The idea behind Union Petrochemical Public and Unique Mining Services 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.