Correlation Between USWE SPORTS and Universal Entertainment

Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment, you can compare the effects of market volatilities on USWE SPORTS and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Universal Entertainment.

Diversification Opportunities for USWE SPORTS and Universal Entertainment

-0.39

Correlation Coefficient

USWE SPORTS  Universal Entertainment

Very good diversification

The 3 months correlation between USWE and Universal is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and Universal Entertainment go up and down completely randomly.

Pair Corralation between USWE SPORTS and Universal Entertainment

Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the Universal Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, USWE SPORTS AB is 1.12 times less risky than Universal Entertainment. The stock trades about -0.06 of its potential returns per unit of risk. The Universal Entertainment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  630.00  in Universal Entertainment on October 4, 2024 and sell it today you would lose (15.00) from holding Universal Entertainment or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

USWE SPORTS AB  vs.  Universal Entertainment

USWE SPORTS AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Universal Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with USWE SPORTS and Universal Entertainment

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

The idea behind USWE SPORTS AB and Universal Entertainment 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.