Correlation Between Universal Stainless and BAIYU Holdings

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

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

Diversification Opportunities for Universal Stainless and BAIYU Holdings

0.0

Correlation Coefficient

Universal Stainless  BAIYU Holdings

Pay attention - limited upside

The 3 months correlation between Universal and BAIYU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and Universal Stainless 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 Stainless Alloy are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Universal Stainless i.e., Universal Stainless and BAIYU Holdings go up and down completely randomly.

Pair Corralation between Universal Stainless and BAIYU Holdings

If you would invest (100.00) in BAIYU Holdings on December 20, 2024 and sell it today you would earn a total of  100.00  from holding BAIYU Holdings or generate -100.0% return on investment over 90 days.

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

Universal Stainless Alloy  vs.  BAIYU Holdings

Universal Stainless Alloy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Stainless Alloy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Universal Stainless is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

BAIYU Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BAIYU Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Universal Stainless and BAIYU Holdings

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

The idea behind Universal Stainless Alloy and BAIYU 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.