Correlation Between UCB SA and TINC Comm

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

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

Diversification Opportunities for UCB SA and TINC Comm

-0.81

Correlation Coefficient

UCB SA  TINC Comm

Pay attention - limited upside

The 3 months correlation between UCB and TINC is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding UCB SA and TINC Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TINC Comm VA and UCB SA 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 UCB SA are associated (or correlated) with TINC Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TINC Comm VA has no effect on the direction of UCB SA i.e., UCB SA and TINC Comm go up and down completely randomly.

Pair Corralation between UCB SA and TINC Comm

Assuming the 90 days trading horizon UCB SA is expected to generate 2.35 times more return on investment than TINC Comm. However, UCB SA is 2.35 times more volatile than TINC Comm VA. It trades about 0.15 of its potential returns per unit of risk. TINC Comm VA is currently generating about -0.15 per unit of risk. If you would invest  15,930  in UCB SA on September 18, 2024 and sell it today you would earn a total of  2,620  from holding UCB SA or generate 16.45% return on investment over 90 days.

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

UCB SA  vs.  TINC Comm VA

UCB SA

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UCB SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, UCB SA reported solid returns over the last few months and may actually be approaching a breakup point.

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TINC Comm VA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with UCB SA and TINC Comm

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

The idea behind UCB SA and TINC Comm VA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..