Correlation Between Universal Entertainment and LAir Liquide

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Can any of the company-specific risk be diversified away by investing in both Universal Entertainment and LAir Liquide 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 Universal Entertainment and LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and LAir Liquide SA, you can compare the effects of market volatilities on Universal Entertainment and LAir Liquide 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 Universal Entertainment with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and LAir Liquide.

Diversification Opportunities for Universal Entertainment and LAir Liquide

UniversalLAirDiversified AwayUniversalLAirDiversified Away100%
0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Universal and LAir is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and Universal Entertainment 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 Universal Entertainment are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Universal Entertainment i.e., Universal Entertainment and LAir Liquide go up and down completely randomly.

Pair Corralation between Universal Entertainment and LAir Liquide

Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the LAir Liquide. In addition to that, Universal Entertainment is 2.92 times more volatile than LAir Liquide SA. It trades about -0.11 of its total potential returns per unit of risk. LAir Liquide SA is currently generating about -0.01 per unit of volatility. If you would invest  16,292  in LAir Liquide SA on September 5, 2024 and sell it today you would lose (234.00) from holding LAir Liquide SA or give up 1.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Universal Entertainment  vs.  LAir Liquide SA

 Performance 
JavaScript chart by amCharts 3.21.15SepOctNov -30-25-20-15-10-505
JavaScript chart by amCharts 3.21.15RUZ AIL
       Timeline  
Universal Entertainment 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Universal Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec66.577.588.5
LAir Liquide SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LAir Liquide is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec155160165170175

Universal Entertainment and LAir Liquide Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.6-4.19-2.79-1.380.01.262.513.775.03 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15RUZ AIL
       Returns  

Pair Trading with Universal Entertainment and LAir Liquide

The main advantage of trading using opposite Universal Entertainment and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.
The idea behind Universal Entertainment and LAir Liquide 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.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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