Correlation Between United Bankers and Detection Technology

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

By analyzing existing cross correlation between United Bankers Oyj and Detection Technology OY, you can compare the effects of market volatilities on United Bankers and Detection Technology 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 Bankers with a short position of Detection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankers and Detection Technology.

Diversification Opportunities for United Bankers and Detection Technology

-0.2

Correlation Coefficient

United Bankers  Detection Technology

Good diversification

The 3 months correlation between United and Detection is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Bankers Oyj and Detection Technology OY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Detection Technology and United Bankers 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 Bankers Oyj are associated (or correlated) with Detection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Detection Technology has no effect on the direction of United Bankers i.e., United Bankers and Detection Technology go up and down completely randomly.

Pair Corralation between United Bankers and Detection Technology

Assuming the 90 days trading horizon United Bankers Oyj is expected to under-perform the Detection Technology. In addition to that, United Bankers is 1.03 times more volatile than Detection Technology OY. It trades about -0.02 of its total potential returns per unit of risk. Detection Technology OY is currently generating about 0.04 per unit of volatility. If you would invest  1,470  in Detection Technology OY on December 25, 2024 and sell it today you would earn a total of  50.00  from holding Detection Technology OY or generate 3.4% return on investment over 90 days.

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

United Bankers Oyj  vs.  Detection Technology OY

United Bankers Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Bankers Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, United Bankers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Detection Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Detection Technology OY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Detection Technology is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with United Bankers and Detection Technology

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

The idea behind United Bankers Oyj and Detection Technology OY 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 CEOs Directory module to screen CEOs from public companies around the world.