Correlation Between UTD OV and Credicorp

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

By analyzing existing cross correlation between UTD OV BK LOC ADR1 and Credicorp, you can compare the effects of market volatilities on UTD OV and Credicorp 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 UTD OV with a short position of Credicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTD OV and Credicorp.

Diversification Opportunities for UTD OV and Credicorp

0.62

Correlation Coefficient

UTD OV  Credicorp

Poor diversification

The 3 months correlation between UTD and Credicorp is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding UTD OV BK LOC ADR1 and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp and UTD OV 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 UTD OV BK LOC ADR1 are associated (or correlated) with Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of UTD OV i.e., UTD OV and Credicorp go up and down completely randomly.

Pair Corralation between UTD OV and Credicorp

Assuming the 90 days trading horizon UTD OV BK LOC ADR1 is expected to generate 0.62 times more return on investment than Credicorp. However, UTD OV BK LOC ADR1 is 1.62 times less risky than Credicorp. It trades about 0.14 of its potential returns per unit of risk. Credicorp is currently generating about 0.04 per unit of risk. If you would invest  5,050  in UTD OV BK LOC ADR1 on October 25, 2024 and sell it today you would earn a total of  150.00  from holding UTD OV BK LOC ADR1 or generate 2.97% return on investment over 90 days.

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

UTD OV BK LOC ADR1  vs.  Credicorp

UTD OV BK

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UTD OV BK LOC ADR1 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, UTD OV reported solid returns over the last few months and may actually be approaching a breakup point.

Credicorp

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with UTD OV and Credicorp

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

The idea behind UTD OV BK LOC ADR1 and Credicorp 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 Transaction History module to view history of all your transactions and understand their impact on performance.