Correlation Between Uber Technologies and Litigation Capital

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

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

Diversification Opportunities for Uber Technologies and Litigation Capital

0.0

Correlation Coefficient

Uber Technologies  Litigation Capital

Pay attention - limited upside

The 3 months correlation between Uber and Litigation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital and Uber Technologies 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 Uber Technologies are associated (or correlated) with Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Uber Technologies i.e., Uber Technologies and Litigation Capital go up and down completely randomly.

Pair Corralation between Uber Technologies and Litigation Capital

Assuming the 90 days trading horizon Uber Technologies is expected to under-perform the Litigation Capital. But the stock apears to be less risky and, when comparing its historical volatility, Uber Technologies is 3.46 times less risky than Litigation Capital. The stock trades about -0.12 of its potential returns per unit of risk. The Litigation Capital Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,639  in Litigation Capital Management on September 11, 2024 and sell it today you would earn a total of  1,211  from holding Litigation Capital Management or generate 12.56% return on investment over 90 days.

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

Uber Technologies  vs.  Litigation Capital Management

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Uber Technologies is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Litigation Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Litigation Capital Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Litigation Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uber Technologies and Litigation Capital

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

The idea behind Uber Technologies and Litigation Capital Management 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.