Correlation Between UTime and Beazer Homes

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

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

Diversification Opportunities for UTime and Beazer Homes

0.67

Correlation Coefficient

UTime  Beazer Homes

Poor diversification

The 3 months correlation between UTime and Beazer is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding UTime Limited and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and UTime 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 UTime Limited are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of UTime i.e., UTime and Beazer Homes go up and down completely randomly.

Pair Corralation between UTime and Beazer Homes

Considering the 90-day investment horizon UTime Limited is expected to under-perform the Beazer Homes. In addition to that, UTime is 1.63 times more volatile than Beazer Homes USA. It trades about -0.09 of its total potential returns per unit of risk. Beazer Homes USA is currently generating about -0.1 per unit of volatility. If you would invest  2,761  in Beazer Homes USA on December 27, 2024 and sell it today you would lose (613.00) from holding Beazer Homes USA or give up 22.2% of portfolio value over 90 days.

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

UTime Limited  vs.  Beazer Homes USA

UTime Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days UTime Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Beazer Homes USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with UTime and Beazer Homes

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

The idea behind UTime Limited and Beazer Homes USA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.