Correlation Between UTI Asset and Hi Tech

Can any of the company-specific risk be diversified away by investing in both UTI Asset and Hi Tech 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 UTI Asset and Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UTI Asset Management and The Hi Tech Gears, you can compare the effects of market volatilities on UTI Asset and Hi Tech 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 UTI Asset with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTI Asset and Hi Tech.

Diversification Opportunities for UTI Asset and Hi Tech

0.25

Correlation Coefficient

UTI Asset  Hi Tech

Modest diversification

The 3 months correlation between UTI and HITECHGEAR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding UTI Asset Management and The Hi Tech Gears in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech and UTI Asset 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 UTI Asset Management are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech has no effect on the direction of UTI Asset i.e., UTI Asset and Hi Tech go up and down completely randomly.

Pair Corralation between UTI Asset and Hi Tech

Assuming the 90 days trading horizon UTI Asset is expected to generate 2.16 times less return on investment than Hi Tech. But when comparing it to its historical volatility, UTI Asset Management is 1.75 times less risky than Hi Tech. It trades about 0.07 of its potential returns per unit of risk. The Hi Tech Gears is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  25,868  in The Hi Tech Gears on October 4, 2024 and sell it today you would earn a total of  54,257  from holding The Hi Tech Gears or generate 209.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

UTI Asset Management  vs.  The Hi Tech Gears

UTI Asset Management

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UTI Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hi Tech Gears has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with UTI Asset and Hi Tech

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

The idea behind UTI Asset Management and The Hi Tech Gears 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.