Correlation Between Universe Pharmaceuticals and UST Inc

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

By analyzing existing cross correlation between Universe Pharmaceuticals and ProShares Ultra 7 10, you can compare the effects of market volatilities on Universe Pharmaceuticals and UST Inc 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 Universe Pharmaceuticals with a short position of UST Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universe Pharmaceuticals and UST Inc.

Diversification Opportunities for Universe Pharmaceuticals and UST Inc

0.55

Correlation Coefficient

Universe Pharmaceuticals  UST Inc

Very weak diversification

The 3 months correlation between Universe and UST is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Universe Pharmaceuticals and ProShares Ultra 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 7 and Universe Pharmaceuticals 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 Universe Pharmaceuticals are associated (or correlated) with UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 7 has no effect on the direction of Universe Pharmaceuticals i.e., Universe Pharmaceuticals and UST Inc go up and down completely randomly.

Pair Corralation between Universe Pharmaceuticals and UST Inc

Considering the 90-day investment horizon Universe Pharmaceuticals is expected to generate 26.41 times more return on investment than UST Inc. However, Universe Pharmaceuticals is 26.41 times more volatile than ProShares Ultra 7 10. It trades about 0.02 of its potential returns per unit of risk. ProShares Ultra 7 10 is currently generating about -0.01 per unit of risk. If you would invest  866.00  in Universe Pharmaceuticals on December 2, 2024 and sell it today you would lose (853.00) from holding Universe Pharmaceuticals or give up 98.5% of portfolio value over 90 days.

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

Universe Pharmaceuticals  vs.  ProShares Ultra 7 10

Universe Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universe Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ProShares Ultra 7

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra 7 10 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UST Inc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universe Pharmaceuticals and UST Inc

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

The idea behind Universe Pharmaceuticals and ProShares Ultra 7 10 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.