Correlation Between Universal Electronics and SUPERNOVA METALS

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

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

Diversification Opportunities for Universal Electronics and SUPERNOVA METALS

0.6

Correlation Coefficient

Universal Electronics  SUPERNOVA METALS

Poor diversification

The 3 months correlation between Universal and SUPERNOVA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and SUPERNOVA METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUPERNOVA METALS P and Universal Electronics 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 Electronics are associated (or correlated) with SUPERNOVA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUPERNOVA METALS P has no effect on the direction of Universal Electronics i.e., Universal Electronics and SUPERNOVA METALS go up and down completely randomly.

Pair Corralation between Universal Electronics and SUPERNOVA METALS

Assuming the 90 days horizon Universal Electronics is expected to under-perform the SUPERNOVA METALS. But the stock apears to be less risky and, when comparing its historical volatility, Universal Electronics is 6.45 times less risky than SUPERNOVA METALS. The stock trades about -0.01 of its potential returns per unit of risk. The SUPERNOVA METALS P is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.50  in SUPERNOVA METALS P on April 24, 2025 and sell it today you would earn a total of  22.50  from holding SUPERNOVA METALS P or generate 409.09% return on investment over 90 days.

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

Universal Electronics  vs.  SUPERNOVA METALS P

Universal Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

SUPERNOVA METALS P

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SUPERNOVA METALS P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SUPERNOVA METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal Electronics and SUPERNOVA METALS

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

The idea behind Universal Electronics and SUPERNOVA METALS P 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.