Correlation Between Copa Holdings and UTime

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

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

Diversification Opportunities for Copa Holdings and UTime

-0.66

Correlation Coefficient

Copa Holdings  UTime

Excellent diversification

The 3 months correlation between Copa and UTime is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and UTime Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTime Limited and Copa 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 Copa Holdings SA are associated (or correlated) with UTime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTime Limited has no effect on the direction of Copa Holdings i.e., Copa Holdings and UTime go up and down completely randomly.

Pair Corralation between Copa Holdings and UTime

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.3 times more return on investment than UTime. However, Copa Holdings SA is 3.35 times less risky than UTime. It trades about 0.11 of its potential returns per unit of risk. UTime Limited is currently generating about -0.08 per unit of risk. If you would invest  8,601  in Copa Holdings SA on December 26, 2024 and sell it today you would earn a total of  1,020  from holding Copa Holdings SA or generate 11.86% return on investment over 90 days.

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

Copa Holdings SA  vs.  UTime Limited

Copa Holdings SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Copa Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

UTime Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days UTime Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Copa Holdings and UTime

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

The idea behind Copa Holdings SA and UTime Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.