Correlation Between Universal Logistics and Concrete Pumping

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

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

Diversification Opportunities for Universal Logistics and Concrete Pumping

0.44

Correlation Coefficient

Universal Logistics  Concrete Pumping

Very weak diversification

The 3 months correlation between Universal and Concrete is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Universal Logistics Holdings and Concrete Pumping Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concrete Pumping Holdings and Universal 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 Universal Logistics Holdings are associated (or correlated) with Concrete Pumping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concrete Pumping Holdings has no effect on the direction of Universal Logistics i.e., Universal Logistics and Concrete Pumping go up and down completely randomly.

Pair Corralation between Universal Logistics and Concrete Pumping

Considering the 90-day investment horizon Universal Logistics Holdings is expected to generate 1.32 times more return on investment than Concrete Pumping. However, Universal Logistics is 1.32 times more volatile than Concrete Pumping Holdings. It trades about 0.04 of its potential returns per unit of risk. Concrete Pumping Holdings is currently generating about 0.03 per unit of risk. If you would invest  3,260  in Universal Logistics Holdings on September 20, 2024 and sell it today you would earn a total of  1,272  from holding Universal Logistics Holdings or generate 39.02% return on investment over 90 days.

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

Universal Logistics Holdings  vs.  Concrete Pumping Holdings

Universal Logistics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Logistics Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Universal Logistics is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Concrete Pumping Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concrete Pumping Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Concrete Pumping reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Logistics and Concrete Pumping

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

The idea behind Universal Logistics Holdings and Concrete Pumping Holdings 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.