Correlation Between Hilan and Unitronics

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

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

Diversification Opportunities for Hilan and Unitronics

0.33

Correlation Coefficient

Hilan  Unitronics

Weak diversification

The 3 months correlation between Hilan and Unitronics is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hilan and Unitronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitronics and Hilan 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 Hilan are associated (or correlated) with Unitronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitronics has no effect on the direction of Hilan i.e., Hilan and Unitronics go up and down completely randomly.

Pair Corralation between Hilan and Unitronics

Assuming the 90 days trading horizon Hilan is expected to generate 0.92 times more return on investment than Unitronics. However, Hilan is 1.09 times less risky than Unitronics. It trades about 0.26 of its potential returns per unit of risk. Unitronics is currently generating about -0.06 per unit of risk. If you would invest  2,337,000  in Hilan on April 25, 2025 and sell it today you would earn a total of  549,000  from holding Hilan or generate 23.49% return on investment over 90 days.

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

Hilan  vs.  Unitronics

Hilan

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hilan are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hilan sustained solid returns over the last few months and may actually be approaching a breakup point.

Unitronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unitronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hilan and Unitronics

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

The idea behind Hilan and Unitronics 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.