Correlation Between Universal Partners and Remgro

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

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

Diversification Opportunities for Universal Partners and Remgro

0.02

Correlation Coefficient

Universal Partners  Remgro

Significant diversification

The 3 months correlation between Universal and Remgro is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Universal Partners and Remgro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remgro and Universal Partners 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 Universal Partners are associated (or correlated) with Remgro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remgro has no effect on the direction of Universal Partners i.e., Universal Partners and Remgro go up and down completely randomly.

Pair Corralation between Universal Partners and Remgro

Assuming the 90 days trading horizon Universal Partners is expected to under-perform the Remgro. In addition to that, Universal Partners is 1.55 times more volatile than Remgro. It trades about 0.0 of its total potential returns per unit of risk. Remgro is currently generating about 0.02 per unit of volatility. If you would invest  1,411,414  in Remgro on October 11, 2024 and sell it today you would earn a total of  106,115  from holding Remgro or generate 7.52% return on investment over 90 days.

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

Universal Partners  vs.  Remgro

Universal Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Universal Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Remgro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remgro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Remgro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Universal Partners and Remgro

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

The idea behind Universal Partners and Remgro 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.