Correlation Between United Hero and BCAP SET100

Can any of the company-specific risk be diversified away by investing in both United Hero and BCAP SET100 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 United Hero and BCAP SET100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Hero ETF and BCAP SET100, you can compare the effects of market volatilities on United Hero and BCAP SET100 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 United Hero with a short position of BCAP SET100. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Hero and BCAP SET100.

Diversification Opportunities for United Hero and BCAP SET100

-0.19

Correlation Coefficient

United Hero  BCAP SET100

Good diversification

The 3 months correlation between United and BCAP is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding United Hero ETF and BCAP SET100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCAP SET100 and United Hero 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 United Hero ETF are associated (or correlated) with BCAP SET100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCAP SET100 has no effect on the direction of United Hero i.e., United Hero and BCAP SET100 go up and down completely randomly.

Pair Corralation between United Hero and BCAP SET100

Assuming the 90 days trading horizon United Hero ETF is expected to generate 2.28 times more return on investment than BCAP SET100. However, United Hero is 2.28 times more volatile than BCAP SET100. It trades about 0.17 of its potential returns per unit of risk. BCAP SET100 is currently generating about -0.33 per unit of risk. If you would invest  803.00  in United Hero ETF on September 22, 2024 and sell it today you would earn a total of  42.00  from holding United Hero ETF or generate 5.23% return on investment over 90 days.

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

United Hero ETF  vs.  BCAP SET100

United Hero ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Hero ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, United Hero sustained solid returns over the last few months and may actually be approaching a breakup point.

BCAP SET100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCAP SET100 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BCAP SET100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Hero and BCAP SET100

The main advantage of trading using opposite United Hero and BCAP SET100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Hero position performs unexpectedly, BCAP SET100 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 BCAP SET100 will offset losses from the drop in BCAP SET100's long position.

The idea behind United Hero ETF and BCAP SET100 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.