Correlation Between Universal Technical and Hitachi Metals

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

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

Diversification Opportunities for Universal Technical and Hitachi Metals

0.0

Correlation Coefficient

Universal Technical  Hitachi Metals

Pay attention - limited upside

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

Pair Corralation between Universal Technical and Hitachi Metals

If you would invest  2,587  in Universal Technical Institute on December 30, 2024 and sell it today you would lose (51.00) from holding Universal Technical Institute or give up 1.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Universal Technical Institute  vs.  Hitachi Metals

Universal Technical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Technical Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Universal Technical is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Hitachi Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hitachi Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Hitachi Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal Technical and Hitachi Metals

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

The idea behind Universal Technical Institute and Hitachi Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.