Correlation Between UDR and 2G ENERGY

Can any of the company-specific risk be diversified away by investing in both UDR and 2G ENERGY 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 UDR and 2G ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UDR Inc and 2G ENERGY , you can compare the effects of market volatilities on UDR and 2G ENERGY 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 UDR with a short position of 2G ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and 2G ENERGY.

Diversification Opportunities for UDR and 2G ENERGY

-0.41

Correlation Coefficient

UDR  2G ENERGY

Very good diversification

The 3 months correlation between UDR and 2GB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and 2G ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2G ENERGY and UDR 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 UDR Inc are associated (or correlated) with 2G ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2G ENERGY has no effect on the direction of UDR i.e., UDR and 2G ENERGY go up and down completely randomly.

Pair Corralation between UDR and 2G ENERGY

Assuming the 90 days horizon UDR is expected to generate 15.81 times less return on investment than 2G ENERGY. But when comparing it to its historical volatility, UDR Inc is 2.56 times less risky than 2G ENERGY. It trades about 0.02 of its potential returns per unit of risk. 2G ENERGY is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,270  in 2G ENERGY on December 28, 2024 and sell it today you would earn a total of  460.00  from holding 2G ENERGY or generate 20.26% return on investment over 90 days.

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

UDR Inc  vs.  2G ENERGY

UDR Inc

Risk-Adjusted Performance

Weak

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

2G ENERGY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 2G ENERGY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, 2G ENERGY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UDR and 2G ENERGY

The main advantage of trading using opposite UDR and 2G ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR position performs unexpectedly, 2G ENERGY 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 2G ENERGY will offset losses from the drop in 2G ENERGY's long position.

The idea behind UDR Inc and 2G ENERGY 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.