Correlation Between Med Life and Uzinexport

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

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

Diversification Opportunities for Med Life and Uzinexport

-0.03

Correlation Coefficient

Med Life  Uzinexport

Good diversification

The 3 months correlation between Med and Uzinexport is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Med Life SA and Uzinexport SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uzinexport SA and Med Life 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 Med Life SA are associated (or correlated) with Uzinexport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uzinexport SA has no effect on the direction of Med Life i.e., Med Life and Uzinexport go up and down completely randomly.

Pair Corralation between Med Life and Uzinexport

Given the investment horizon of 90 days Med Life is expected to generate 6.01 times less return on investment than Uzinexport. But when comparing it to its historical volatility, Med Life SA is 5.19 times less risky than Uzinexport. It trades about 0.04 of its potential returns per unit of risk. Uzinexport SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Uzinexport SA on December 21, 2024 and sell it today you would earn a total of  2.00  from holding Uzinexport SA or generate 4.0% return on investment over 90 days.

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

Med Life SA  vs.  Uzinexport SA

Med Life SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Med Life SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Med Life is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Uzinexport SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uzinexport SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Uzinexport displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Med Life and Uzinexport

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

The idea behind Med Life SA and Uzinexport 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.