Correlation Between Universal Stainless and KinderCare Learning

Can any of the company-specific risk be diversified away by investing in both Universal Stainless and KinderCare Learning 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 KinderCare Learning 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 KinderCare Learning Companies,, you can compare the effects of market volatilities on Universal Stainless and KinderCare Learning 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 KinderCare Learning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and KinderCare Learning.

Diversification Opportunities for Universal Stainless and KinderCare Learning

-0.46

Correlation Coefficient

Universal Stainless  KinderCare Learning

Very good diversification

The 3 months correlation between Universal and KinderCare is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and KinderCare Learning Companies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KinderCare Learning 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 KinderCare Learning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KinderCare Learning has no effect on the direction of Universal Stainless i.e., Universal Stainless and KinderCare Learning go up and down completely randomly.

Pair Corralation between Universal Stainless and KinderCare Learning

Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.08 times more return on investment than KinderCare Learning. However, Universal Stainless Alloy is 11.77 times less risky than KinderCare Learning. It trades about 0.15 of its potential returns per unit of risk. KinderCare Learning Companies, is currently generating about -0.11 per unit of risk. If you would invest  4,364  in Universal Stainless Alloy on October 26, 2024 and sell it today you would earn a total of  135.00  from holding Universal Stainless Alloy or generate 3.09% return on investment over 90 days.

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

Universal Stainless Alloy  vs.  KinderCare Learning Companies,

Universal Stainless Alloy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. 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.

KinderCare Learning

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Universal Stainless and KinderCare Learning

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

The idea behind Universal Stainless Alloy and KinderCare Learning Companies, 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.