Correlation Between Charlies Holdings and Universal

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

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

Diversification Opportunities for Charlies Holdings and Universal

0.0

Correlation Coefficient

Charlies Holdings  Universal

Pay attention - limited upside

The 3 months correlation between Charlies and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charlies Holdings and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal and Charlies Holdings 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 Charlies Holdings are associated (or correlated) with Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Charlies Holdings i.e., Charlies Holdings and Universal go up and down completely randomly.

Pair Corralation between Charlies Holdings and Universal

If you would invest  5,348  in Universal on December 30, 2024 and sell it today you would earn a total of  256.00  from holding Universal or generate 4.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Charlies Holdings  vs.  Universal

Charlies Holdings

Risk-Adjusted Performance

Very Weak

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

Universal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Charlies Holdings and Universal

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

The idea behind Charlies Holdings and Universal 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.