Correlation Between Great Western and Uniphar Group

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

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

Diversification Opportunities for Great Western and Uniphar Group

-0.17

Correlation Coefficient

Great Western  Uniphar Group

Good diversification

The 3 months correlation between Great and Uniphar is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Great Western Mining and Uniphar Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniphar Group PLC and Great Western 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 Great Western Mining are associated (or correlated) with Uniphar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniphar Group PLC has no effect on the direction of Great Western i.e., Great Western and Uniphar Group go up and down completely randomly.

Pair Corralation between Great Western and Uniphar Group

Assuming the 90 days trading horizon Great Western Mining is expected to generate 3.62 times more return on investment than Uniphar Group. However, Great Western is 3.62 times more volatile than Uniphar Group PLC. It trades about 0.03 of its potential returns per unit of risk. Uniphar Group PLC is currently generating about -0.02 per unit of risk. If you would invest  0.10  in Great Western Mining on November 19, 2024 and sell it today you would earn a total of  0.00  from holding Great Western Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Great Western Mining  vs.  Uniphar Group PLC

Great Western Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Western Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Uniphar Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uniphar Group PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Uniphar Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Western and Uniphar Group

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

The idea behind Great Western Mining and Uniphar Group PLC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.