Correlation Between UTStarcom Holdings and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both UTStarcom Holdings and Martin Marietta 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 UTStarcom Holdings and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UTStarcom Holdings Corp and Martin Marietta Materials, you can compare the effects of market volatilities on UTStarcom Holdings and Martin Marietta 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 UTStarcom Holdings with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTStarcom Holdings and Martin Marietta.

Diversification Opportunities for UTStarcom Holdings and Martin Marietta

-0.53

Correlation Coefficient

UTStarcom Holdings  Martin Marietta

Excellent diversification

The 3 months correlation between UTStarcom and Martin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding UTStarcom Holdings Corp and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and UTStarcom Holdings 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 UTStarcom Holdings Corp are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of UTStarcom Holdings i.e., UTStarcom Holdings and Martin Marietta go up and down completely randomly.

Pair Corralation between UTStarcom Holdings and Martin Marietta

Assuming the 90 days trading horizon UTStarcom Holdings Corp is expected to under-perform the Martin Marietta. But the stock apears to be less risky and, when comparing its historical volatility, UTStarcom Holdings Corp is 4.62 times less risky than Martin Marietta. The stock trades about -0.13 of its potential returns per unit of risk. The Martin Marietta Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,012,976  in Martin Marietta Materials on October 8, 2024 and sell it today you would earn a total of  101,881  from holding Martin Marietta Materials or generate 10.06% return on investment over 90 days.

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

UTStarcom Holdings Corp  vs.  Martin Marietta Materials

UTStarcom Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTStarcom Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, UTStarcom Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Martin Marietta Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with UTStarcom Holdings and Martin Marietta

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

The idea behind UTStarcom Holdings Corp and Martin Marietta Materials 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.