Correlation Between Universal Power and Defentect

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

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

Diversification Opportunities for Universal Power and Defentect

-0.11

Correlation Coefficient

Universal Power  Defentect

Good diversification

The 3 months correlation between Universal and Defentect is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Universal Power Industry and Defentect Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defentect Group and Universal Power 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 Power Industry are associated (or correlated) with Defentect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defentect Group has no effect on the direction of Universal Power i.e., Universal Power and Defentect go up and down completely randomly.

Pair Corralation between Universal Power and Defentect

Given the investment horizon of 90 days Universal Power Industry is expected to under-perform the Defentect. In addition to that, Universal Power is 2.73 times more volatile than Defentect Group. It trades about -0.13 of its total potential returns per unit of risk. Defentect Group is currently generating about 0.02 per unit of volatility. If you would invest  0.43  in Defentect Group on May 3, 2025 and sell it today you would earn a total of  0.00  from holding Defentect Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Universal Power Industry  vs.  Defentect Group

Universal Power Industry

Risk-Adjusted Performance

Very Weak

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

Defentect Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defentect Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Defentect is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Universal Power and Defentect

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

The idea behind Universal Power Industry and Defentect Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.