Correlation Between UOL Group and Commercial International

Can any of the company-specific risk be diversified away by investing in both UOL Group and Commercial International 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 Commercial International 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 Commercial International Bank, you can compare the effects of market volatilities on UOL Group and Commercial International 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 Commercial International. Check out your portfolio center. Please also check ongoing floating volatility patterns of UOL Group and Commercial International.

Diversification Opportunities for UOL Group and Commercial International

0.42

Correlation Coefficient

UOL Group  Commercial International

Very weak diversification

The 3 months correlation between UOL and Commercial is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding UOL Group Ltd and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International 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 Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of UOL Group i.e., UOL Group and Commercial International go up and down completely randomly.

Pair Corralation between UOL Group and Commercial International

Assuming the 90 days horizon UOL Group Ltd is expected to generate 2.43 times more return on investment than Commercial International. However, UOL Group is 2.43 times more volatile than Commercial International Bank. It trades about -0.06 of its potential returns per unit of risk. Commercial International Bank is currently generating about -0.3 per unit of risk. If you would invest  1,580  in UOL Group Ltd on October 12, 2024 and sell it today you would lose (59.00) from holding UOL Group Ltd or give up 3.73% of portfolio value over 90 days.

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

UOL Group Ltd  vs.  Commercial International Bank

UOL Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UOL Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UOL Group and Commercial International

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

The idea behind UOL Group Ltd and Commercial International Bank 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.