Correlation Between Unitech and Hilton Metal

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

By analyzing existing cross correlation between Unitech Limited and Hilton Metal Forging, you can compare the effects of market volatilities on Unitech and Hilton Metal 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 Unitech with a short position of Hilton Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unitech and Hilton Metal.

Diversification Opportunities for Unitech and Hilton Metal

0.11

Correlation Coefficient

Unitech  Hilton Metal

Average diversification

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

Pair Corralation between Unitech and Hilton Metal

Assuming the 90 days trading horizon Unitech is expected to generate 2.09 times less return on investment than Hilton Metal. In addition to that, Unitech is 1.14 times more volatile than Hilton Metal Forging. It trades about 0.14 of its total potential returns per unit of risk. Hilton Metal Forging is currently generating about 0.34 per unit of volatility. If you would invest  8,063  in Hilton Metal Forging on September 22, 2024 and sell it today you would earn a total of  1,687  from holding Hilton Metal Forging or generate 20.92% return on investment over 90 days.

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

Unitech Limited  vs.  Hilton Metal Forging

Unitech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unitech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hilton Metal Forging

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unitech and Hilton Metal

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

The idea behind Unitech Limited and Hilton Metal Forging 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.