Correlation Between UGE International and CEZ A

Can any of the company-specific risk be diversified away by investing in both UGE International and CEZ A 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 UGE International and CEZ A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UGE International and CEZ A S, you can compare the effects of market volatilities on UGE International and CEZ A 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 UGE International with a short position of CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGE International and CEZ A.

Diversification Opportunities for UGE International and CEZ A

-0.37

Correlation Coefficient

UGE International  CEZ A

Very good diversification

The 3 months correlation between UGE and CEZ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding UGE International and CEZ A S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ A S and UGE International 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 UGE International are associated (or correlated) with CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ A S has no effect on the direction of UGE International i.e., UGE International and CEZ A go up and down completely randomly.

Pair Corralation between UGE International and CEZ A

If you would invest  137.00  in UGE International on September 5, 2024 and sell it today you would earn a total of  9.00  from holding UGE International or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.96%
Values	Daily Returns

UGE International  vs.  CEZ A S

UGE International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UGE International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, UGE International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CEZ A S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEZ A S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CEZ A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UGE International and CEZ A

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

The idea behind UGE International and CEZ A S 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.