Correlation Between Universal and Network CN

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

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

Diversification Opportunities for Universal and Network CN

-0.52

Correlation Coefficient

Universal  Network CN

Excellent diversification

The 3 months correlation between Universal and Network is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Network CN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network CN and Universal 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 Universal are associated (or correlated) with Network CN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network CN has no effect on the direction of Universal i.e., Universal and Network CN go up and down completely randomly.

Pair Corralation between Universal and Network CN

Considering the 90-day investment horizon Universal is expected to generate 72.77 times less return on investment than Network CN. But when comparing it to its historical volatility, Universal is 70.27 times less risky than Network CN. It trades about 0.23 of its potential returns per unit of risk. Network CN is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Network CN on September 15, 2024 and sell it today you would lose (94.00) from holding Network CN or give up 94.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Universal  vs.  Network CN

Universal

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Universal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Network CN

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Network CN are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Network CN displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal and Network CN

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

The idea behind Universal and Network CN 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 CEOs Directory module to screen CEOs from public companies around the world.