Correlation Between Commercial International and UOL Group

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

By analyzing existing cross correlation between Commercial International Bank and UOL Group Ltd, you can compare the effects of market volatilities on Commercial International and UOL 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 Commercial International with a short position of UOL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and UOL Group.

Diversification Opportunities for Commercial International and UOL Group

0.42

Correlation Coefficient

Commercial International  UOL Group

Very weak diversification

The 3 months correlation between Commercial and UOL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and UOL Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOL Group and Commercial International 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 Commercial International Bank are associated (or correlated) with UOL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UOL Group has no effect on the direction of Commercial International i.e., Commercial International and UOL Group go up and down completely randomly.

Pair Corralation between Commercial International and UOL Group

Assuming the 90 days horizon Commercial International Bank is expected to under-perform the UOL Group. But the otc stock apears to be less risky and, when comparing its historical volatility, Commercial International Bank is 2.43 times less risky than UOL Group. The otc stock trades about -0.3 of its potential returns per unit of risk. The UOL Group Ltd is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,580  in UOL Group Ltd on October 12, 2024 and sell it today you would lose (59.00) from holding UOL Group Ltd or give up 3.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Commercial International Bank  vs.  UOL Group Ltd

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial International Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Commercial International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UOL Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UOL Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Commercial International and UOL Group

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

The idea behind Commercial International Bank and UOL Group Ltd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.