Correlation Between Unitronics and Palram

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

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

Diversification Opportunities for Unitronics and Palram

0.41

Correlation Coefficient

Unitronics  Palram

Very weak diversification

The 3 months correlation between Unitronics and Palram is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Unitronics and Palram in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palram and Unitronics 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 Unitronics are associated (or correlated) with Palram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palram has no effect on the direction of Unitronics i.e., Unitronics and Palram go up and down completely randomly.

Pair Corralation between Unitronics and Palram

Assuming the 90 days trading horizon Unitronics is expected to generate 0.96 times more return on investment than Palram. However, Unitronics is 1.04 times less risky than Palram. It trades about -0.03 of its potential returns per unit of risk. Palram is currently generating about -0.04 per unit of risk. If you would invest  250,201  in Unitronics on May 21, 2025 and sell it today you would lose (15,701) from holding Unitronics or give up 6.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.04%
Values	Daily Returns

Unitronics  vs.  Palram

Unitronics

Risk-Adjusted Performance

Weakest

Over the last 90 days Unitronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Unitronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Palram

Risk-Adjusted Performance

Weakest

Over the last 90 days Palram 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 Unitronics and Palram

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

The idea behind Unitronics and Palram 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.