Correlation Between UOL Group and Britvic PLC

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

By analyzing existing cross correlation between UOL Group Ltd and Britvic PLC ADR, you can compare the effects of market volatilities on UOL Group and Britvic PLC 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 UOL Group with a short position of Britvic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UOL Group and Britvic PLC.

Diversification Opportunities for UOL Group and Britvic PLC

-0.82

Correlation Coefficient

UOL Group  Britvic PLC

Pay attention - limited upside

The 3 months correlation between UOL and Britvic is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding UOL Group Ltd and Britvic PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic PLC ADR and UOL Group 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 UOL Group Ltd are associated (or correlated) with Britvic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic PLC ADR has no effect on the direction of UOL Group i.e., UOL Group and Britvic PLC go up and down completely randomly.

Pair Corralation between UOL Group and Britvic PLC

Assuming the 90 days horizon UOL Group Ltd is expected to generate 1.15 times more return on investment than Britvic PLC. However, UOL Group is 1.15 times more volatile than Britvic PLC ADR. It trades about 0.12 of its potential returns per unit of risk. Britvic PLC ADR is currently generating about -0.14 per unit of risk. If you would invest  1,510  in UOL Group Ltd on December 19, 2024 and sell it today you would earn a total of  255.00  from holding UOL Group Ltd or generate 16.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	61.02%
Values	Daily Returns

UOL Group Ltd  vs.  Britvic PLC ADR

UOL Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UOL Group Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, UOL Group showed solid returns over the last few months and may actually be approaching a breakup point.

Britvic PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Britvic PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with UOL Group and Britvic PLC

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

The idea behind UOL Group Ltd and Britvic PLC ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.