Correlation Between Union Petrochemical and Yuasa Battery

Can any of the company-specific risk be diversified away by investing in both Union Petrochemical and Yuasa Battery 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 Yuasa Battery 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 Yuasa Battery Public, you can compare the effects of market volatilities on Union Petrochemical and Yuasa Battery 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 Yuasa Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Petrochemical and Yuasa Battery.

Diversification Opportunities for Union Petrochemical and Yuasa Battery

-0.11

Correlation Coefficient

Union Petrochemical  Yuasa Battery

Good diversification

The 3 months correlation between Union and Yuasa is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Union Petrochemical Public and Yuasa Battery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuasa Battery Public 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 Yuasa Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuasa Battery Public has no effect on the direction of Union Petrochemical i.e., Union Petrochemical and Yuasa Battery go up and down completely randomly.

Pair Corralation between Union Petrochemical and Yuasa Battery

Assuming the 90 days trading horizon Union Petrochemical is expected to generate 30.32 times less return on investment than Yuasa Battery. In addition to that, Union Petrochemical is 5.4 times more volatile than Yuasa Battery Public. It trades about 0.0 of its total potential returns per unit of risk. Yuasa Battery Public is currently generating about 0.05 per unit of volatility. If you would invest  1,000.00  in Yuasa Battery Public on December 30, 2024 and sell it today you would earn a total of  40.00  from holding Yuasa Battery Public or generate 4.0% return on investment over 90 days.

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

Union Petrochemical Public  vs.  Yuasa Battery Public

Union Petrochemical

Risk-Adjusted Performance

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 quite persistent forward-looking signals, Union Petrochemical is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Yuasa Battery Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yuasa Battery Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Yuasa Battery is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Union Petrochemical and Yuasa Battery

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

The idea behind Union Petrochemical Public and Yuasa Battery 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.