Correlation Between UBS AST and UBS PF

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

By analyzing existing cross correlation between UBS AST 2 and UBS PF Swiss, you can compare the effects of market volatilities on UBS AST and UBS PF 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 UBS AST with a short position of UBS PF. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS AST and UBS PF.

Diversification Opportunities for UBS AST and UBS PF

-0.04

Correlation Coefficient

UBS AST  UBS PF

Good diversification

The 3 months correlation between UBS and UBS is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding UBS AST 2 and UBS PF Swiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS PF Swiss and UBS AST 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 UBS AST 2 are associated (or correlated) with UBS PF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS PF Swiss has no effect on the direction of UBS AST i.e., UBS AST and UBS PF go up and down completely randomly.

Pair Corralation between UBS AST and UBS PF

Assuming the 90 days trading horizon UBS AST 2 is expected to under-perform the UBS PF. In addition to that, UBS AST is 1.21 times more volatile than UBS PF Swiss. It trades about -0.18 of its total potential returns per unit of risk. UBS PF Swiss is currently generating about -0.06 per unit of volatility. If you would invest  15,480  in UBS PF Swiss on December 13, 2024 and sell it today you would lose (180.00) from holding UBS PF Swiss or give up 1.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

UBS AST 2  vs.  UBS PF Swiss

UBS AST 2

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS AST 2 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, UBS AST is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBS PF Swiss

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS PF Swiss has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, UBS PF is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with UBS AST and UBS PF

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

The idea behind UBS AST 2 and UBS PF Swiss 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.