Correlation Between UNITED INVESTMENTS and AUTOMATIC SYSTEMS

Can any of the company-specific risk be diversified away by investing in both UNITED INVESTMENTS and AUTOMATIC SYSTEMS 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 UNITED INVESTMENTS and AUTOMATIC SYSTEMS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNITED INVESTMENTS LTD and AUTOMATIC SYSTEMS LTD, you can compare the effects of market volatilities on UNITED INVESTMENTS and AUTOMATIC SYSTEMS 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 UNITED INVESTMENTS with a short position of AUTOMATIC SYSTEMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED INVESTMENTS and AUTOMATIC SYSTEMS.

Diversification Opportunities for UNITED INVESTMENTS and AUTOMATIC SYSTEMS

-0.84

Correlation Coefficient

UNITED INVESTMENTS  AUTOMATIC SYSTEMS

Pay attention - limited upside

The 3 months correlation between UNITED and AUTOMATIC is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding UNITED INVESTMENTS LTD and AUTOMATIC SYSTEMS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTOMATIC SYSTEMS LTD and UNITED INVESTMENTS 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 UNITED INVESTMENTS LTD are associated (or correlated) with AUTOMATIC SYSTEMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTOMATIC SYSTEMS LTD has no effect on the direction of UNITED INVESTMENTS i.e., UNITED INVESTMENTS and AUTOMATIC SYSTEMS go up and down completely randomly.

Pair Corralation between UNITED INVESTMENTS and AUTOMATIC SYSTEMS

Assuming the 90 days trading horizon UNITED INVESTMENTS LTD is expected to generate 3.24 times more return on investment than AUTOMATIC SYSTEMS. However, UNITED INVESTMENTS is 3.24 times more volatile than AUTOMATIC SYSTEMS LTD. It trades about 0.03 of its potential returns per unit of risk. AUTOMATIC SYSTEMS LTD is currently generating about -0.01 per unit of risk. If you would invest  410.00  in UNITED INVESTMENTS LTD on October 9, 2024 and sell it today you would lose (14.00) from holding UNITED INVESTMENTS LTD or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	83.17%
Values	Daily Returns

UNITED INVESTMENTS LTD  vs.  AUTOMATIC SYSTEMS LTD

UNITED INVESTMENTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED INVESTMENTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AUTOMATIC SYSTEMS LTD

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AUTOMATIC SYSTEMS LTD are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, AUTOMATIC SYSTEMS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITED INVESTMENTS and AUTOMATIC SYSTEMS

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

The idea behind UNITED INVESTMENTS LTD and AUTOMATIC SYSTEMS LTD 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.