Correlation Between UIL and Intops

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

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

Diversification Opportunities for UIL and Intops

0.32

Correlation Coefficient

UIL  Intops

Weak diversification

The 3 months correlation between UIL and Intops is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding UIL Co and Intops Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intops and UIL 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 UIL Co are associated (or correlated) with Intops. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intops has no effect on the direction of UIL i.e., UIL and Intops go up and down completely randomly.

Pair Corralation between UIL and Intops

Assuming the 90 days trading horizon UIL Co is expected to generate 0.69 times more return on investment than Intops. However, UIL Co is 1.45 times less risky than Intops. It trades about 0.24 of its potential returns per unit of risk. Intops Co is currently generating about 0.03 per unit of risk. If you would invest  314,457  in UIL Co on December 23, 2024 and sell it today you would earn a total of  113,543  from holding UIL Co or generate 36.11% return on investment over 90 days.

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

UIL Co  vs.  Intops Co

UIL Co

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UIL Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UIL sustained solid returns over the last few months and may actually be approaching a breakup point.

Intops

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intops Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intops may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UIL and Intops

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

The idea behind UIL Co and Intops Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.