Correlation Between United Parks and Fenbo Holdings

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

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

Diversification Opportunities for United Parks and Fenbo Holdings

-0.72

Correlation Coefficient

United Parks  Fenbo Holdings

Pay attention - limited upside

The 3 months correlation between United and Fenbo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Parks Resorts and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and United Parks 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 United Parks Resorts are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of United Parks i.e., United Parks and Fenbo Holdings go up and down completely randomly.

Pair Corralation between United Parks and Fenbo Holdings

Given the investment horizon of 90 days United Parks Resorts is expected to generate 0.18 times more return on investment than Fenbo Holdings. However, United Parks Resorts is 5.62 times less risky than Fenbo Holdings. It trades about 0.02 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.06 per unit of risk. If you would invest  5,672  in United Parks Resorts on October 10, 2024 and sell it today you would earn a total of  153.00  from holding United Parks Resorts or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

United Parks Resorts  vs.  Fenbo Holdings Limited

United Parks Resorts

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, United Parks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fenbo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Parks and Fenbo Holdings

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

The idea behind United Parks Resorts and Fenbo Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.