Correlation Between United Paper and Inoue Rubber

Can any of the company-specific risk be diversified away by investing in both United Paper and Inoue Rubber 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 Paper and Inoue Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Paper Public and Inoue Rubber Public, you can compare the effects of market volatilities on United Paper and Inoue Rubber 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 Paper with a short position of Inoue Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Paper and Inoue Rubber.

Diversification Opportunities for United Paper and Inoue Rubber

-0.91

Correlation Coefficient

United Paper  Inoue Rubber

Pay attention - limited upside

The 3 months correlation between United and Inoue is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding United Paper Public and Inoue Rubber Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inoue Rubber Public and United Paper 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 Paper Public are associated (or correlated) with Inoue Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inoue Rubber Public has no effect on the direction of United Paper i.e., United Paper and Inoue Rubber go up and down completely randomly.

Pair Corralation between United Paper and Inoue Rubber

Assuming the 90 days trading horizon United Paper Public is expected to generate 0.7 times more return on investment than Inoue Rubber. However, United Paper Public is 1.43 times less risky than Inoue Rubber. It trades about 0.08 of its potential returns per unit of risk. Inoue Rubber Public is currently generating about -0.2 per unit of risk. If you would invest  756.00  in United Paper Public on December 29, 2024 and sell it today you would earn a total of  29.00  from holding United Paper Public or generate 3.84% return on investment over 90 days.

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

United Paper Public  vs.  Inoue Rubber Public

United Paper Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Paper Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, United Paper is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Inoue Rubber Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inoue Rubber Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with United Paper and Inoue Rubber

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

The idea behind United Paper Public and Inoue Rubber Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.