Correlation Between UNITED UTILITIES and TOREX SEMICONDUCTOR

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

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

Diversification Opportunities for UNITED UTILITIES and TOREX SEMICONDUCTOR

-0.36

Correlation Coefficient

UNITED UTILITIES  TOREX SEMICONDUCTOR

Very good diversification

The 3 months correlation between UNITED and TOREX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD and UNITED UTILITIES 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 UTILITIES GR are associated (or correlated) with TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and TOREX SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and TOREX SEMICONDUCTOR

Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the TOREX SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, UNITED UTILITIES GR is 1.67 times less risky than TOREX SEMICONDUCTOR. The stock trades about -0.05 of its potential returns per unit of risk. The TOREX SEMICONDUCTOR LTD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  704.00  in TOREX SEMICONDUCTOR LTD on December 29, 2024 and sell it today you would earn a total of  54.00  from holding TOREX SEMICONDUCTOR LTD or generate 7.67% return on investment over 90 days.

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

UNITED UTILITIES GR  vs.  TOREX SEMICONDUCTOR LTD

UNITED UTILITIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNITED UTILITIES GR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UNITED UTILITIES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOREX SEMICONDUCTOR LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TOREX SEMICONDUCTOR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UNITED UTILITIES and TOREX SEMICONDUCTOR

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

The idea behind UNITED UTILITIES GR and TOREX SEMICONDUCTOR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.