Correlation Between USWE SPORTS and INDIKA ENERGY

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

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

Diversification Opportunities for USWE SPORTS and INDIKA ENERGY

-0.86

Correlation Coefficient

USWE SPORTS  INDIKA ENERGY

Pay attention - limited upside

The 3 months correlation between USWE and INDIKA is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between USWE SPORTS and INDIKA ENERGY

Assuming the 90 days horizon USWE SPORTS is expected to generate 2.33 times less return on investment than INDIKA ENERGY. But when comparing it to its historical volatility, USWE SPORTS AB is 1.78 times less risky than INDIKA ENERGY. It trades about 0.12 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7.85  in INDIKA ENERGY on October 11, 2024 and sell it today you would earn a total of  0.80  from holding INDIKA ENERGY or generate 10.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

USWE SPORTS AB  vs.  INDIKA ENERGY

USWE SPORTS AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, INDIKA ENERGY is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with USWE SPORTS and INDIKA ENERGY

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

The idea behind USWE SPORTS AB and INDIKA ENERGY 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.