Correlation Between Carlson Investments and UF Games

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

By analyzing existing cross correlation between Carlson Investments SA and UF Games SA, you can compare the effects of market volatilities on Carlson Investments and UF Games 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 Carlson Investments with a short position of UF Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlson Investments and UF Games.

Diversification Opportunities for Carlson Investments and UF Games

0.2

Correlation Coefficient

Carlson Investments  UF Games

Modest diversification

The 3 months correlation between Carlson and UFG is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Carlson Investments SA and UF Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UF Games SA and Carlson Investments 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 Carlson Investments SA are associated (or correlated) with UF Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UF Games SA has no effect on the direction of Carlson Investments i.e., Carlson Investments and UF Games go up and down completely randomly.

Pair Corralation between Carlson Investments and UF Games

Assuming the 90 days trading horizon Carlson Investments is expected to generate 1.07 times less return on investment than UF Games. In addition to that, Carlson Investments is 1.65 times more volatile than UF Games SA. It trades about 0.06 of its total potential returns per unit of risk. UF Games SA is currently generating about 0.11 per unit of volatility. If you would invest  89.00  in UF Games SA on December 30, 2024 and sell it today you would earn a total of  18.00  from holding UF Games SA or generate 20.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.03%
Values	Daily Returns

Carlson Investments SA  vs.  UF Games SA

Carlson Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlson Investments SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Carlson Investments reported solid returns over the last few months and may actually be approaching a breakup point.

UF Games SA

Risk-Adjusted Performance

OK

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

Pair Trading with Carlson Investments and UF Games

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

The idea behind Carlson Investments SA and UF Games SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.