Correlation Between Uipath and Stem

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

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

Diversification Opportunities for Uipath and Stem

-0.18

Correlation Coefficient

Uipath  Stem

Good diversification

The 3 months correlation between Uipath and Stem is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Uipath Inc and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc and Uipath 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 Uipath Inc are associated (or correlated) with Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of Uipath i.e., Uipath and Stem go up and down completely randomly.

Pair Corralation between Uipath and Stem

Given the investment horizon of 90 days Uipath Inc is expected to under-perform the Stem. But the stock apears to be less risky and, when comparing its historical volatility, Uipath Inc is 7.15 times less risky than Stem. The stock trades about -0.27 of its potential returns per unit of risk. The Stem Inc is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Stem Inc on October 10, 2024 and sell it today you would earn a total of  77.00  from holding Stem Inc or generate 213.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Uipath Inc  vs.  Stem Inc

Uipath Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uipath Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Uipath may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Stem Inc

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uipath and Stem

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

The idea behind Uipath Inc and Stem Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..