Correlation Between CHP and UQC

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

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

Diversification Opportunities for CHP and UQC

-0.27

Correlation Coefficient

CHP  UQC

Very good diversification

The 3 months correlation between CHP and UQC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CHP and UQC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UQC and CHP 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 CHP are associated (or correlated) with UQC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UQC has no effect on the direction of CHP i.e., CHP and UQC go up and down completely randomly.

Pair Corralation between CHP and UQC

Assuming the 90 days trading horizon CHP is expected to generate 1.26 times more return on investment than UQC. However, CHP is 1.26 times more volatile than UQC. It trades about 0.22 of its potential returns per unit of risk. UQC is currently generating about -0.12 per unit of risk. If you would invest  0.00  in CHP on June 4, 2025 and sell it today you would earn a total of  0.00  from holding CHP or generate 22.22% return on investment over 90 days.

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

CHP  vs.  UQC

CHP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CHP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CHP exhibited solid returns over the last few months and may actually be approaching a breakup point.

UQC

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in UQC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, UQC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHP and UQC

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

The idea behind CHP and UQC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.