Correlation Between 00687YAB1 and United Guardian

Can any of the company-specific risk be diversified away by investing in both 00687YAB1 and United Guardian 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 00687YAB1 and United Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADNT 7 15 APR 28 and United Guardian, you can compare the effects of market volatilities on 00687YAB1 and United Guardian 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 00687YAB1 with a short position of United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00687YAB1 and United Guardian.

Diversification Opportunities for 00687YAB1 and United Guardian

0.42

Correlation Coefficient

00687YAB1  United Guardian

Very weak diversification

The 3 months correlation between 00687YAB1 and United is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ADNT 7 15 APR 28 and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian and 00687YAB1 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 ADNT 7 15 APR 28 are associated (or correlated) with United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of 00687YAB1 i.e., 00687YAB1 and United Guardian go up and down completely randomly.

Pair Corralation between 00687YAB1 and United Guardian

Assuming the 90 days trading horizon ADNT 7 15 APR 28 is expected to under-perform the United Guardian. But the bond apears to be less risky and, when comparing its historical volatility, ADNT 7 15 APR 28 is 5.64 times less risky than United Guardian. The bond trades about -0.01 of its potential returns per unit of risk. The United Guardian is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  992.00  in United Guardian on September 21, 2024 and sell it today you would lose (26.00) from holding United Guardian or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.83%
Values	Daily Returns

ADNT 7 15 APR 28  vs.  United Guardian

ADNT 7 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADNT 7 15 APR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00687YAB1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with 00687YAB1 and United Guardian

The main advantage of trading using opposite 00687YAB1 and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00687YAB1 position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian's long position.

The idea behind ADNT 7 15 APR 28 and United Guardian 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.