Correlation Between Universal Stainless and NESNVX

Can any of the company-specific risk be diversified away by investing in both Universal Stainless and NESNVX 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 NESNVX 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 NESNVX 525 13 MAR 26, you can compare the effects of market volatilities on Universal Stainless and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and NESNVX.

Diversification Opportunities for Universal Stainless and NESNVX

-0.16

Correlation Coefficient

Universal Stainless  NESNVX

Good diversification

The 3 months correlation between Universal and NESNVX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and NESNVX 525 13 MAR 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 525 13 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 525 13 has no effect on the direction of Universal Stainless i.e., Universal Stainless and NESNVX go up and down completely randomly.

Pair Corralation between Universal Stainless and NESNVX

Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.71 times more return on investment than NESNVX. However, Universal Stainless Alloy is 1.41 times less risky than NESNVX. It trades about -0.09 of its potential returns per unit of risk. NESNVX 525 13 MAR 26 is currently generating about -0.36 per unit of risk. If you would invest  4,422  in Universal Stainless Alloy on October 10, 2024 and sell it today you would lose (22.00) from holding Universal Stainless Alloy or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Universal Stainless Alloy  vs.  NESNVX 525 13 MAR 26

Universal Stainless Alloy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Universal Stainless may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NESNVX 525 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 525 13 MAR 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Stainless and NESNVX

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

The idea behind Universal Stainless Alloy and NESNVX 525 13 MAR 26 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.