Correlation Between Universal Entertainment and IBEX Technologies

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

By analyzing existing cross correlation between Universal Entertainment and IBEX Technologies, you can compare the effects of market volatilities on Universal Entertainment and IBEX Technologies 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 IBEX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and IBEX Technologies.

Diversification Opportunities for Universal Entertainment and IBEX Technologies

-0.33

Correlation Coefficient

Universal Entertainment  IBEX Technologies

Very good diversification

The 3 months correlation between Universal and IBEX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and IBEX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX Technologies 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 IBEX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX Technologies has no effect on the direction of Universal Entertainment i.e., Universal Entertainment and IBEX Technologies go up and down completely randomly.

Pair Corralation between Universal Entertainment and IBEX Technologies

Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the IBEX Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Universal Entertainment is 16.87 times less risky than IBEX Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The IBEX Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  53.00  in IBEX Technologies on October 4, 2024 and sell it today you would earn a total of  68,147  from holding IBEX Technologies or generate 128579.25% return on investment over 90 days.

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

Universal Entertainment  vs.  IBEX Technologies

Universal Entertainment

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

IBEX Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IBEX Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IBEX Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal Entertainment and IBEX Technologies

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

The idea behind Universal Entertainment and IBEX Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.