Correlation Between UNIVERSAL PARTNERS and LUX ISLAND

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

By analyzing existing cross correlation between UNIVERSAL PARTNERS LTD and LUX ISLAND RESORTS, you can compare the effects of market volatilities on UNIVERSAL PARTNERS and LUX ISLAND 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 LUX ISLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL PARTNERS and LUX ISLAND.

Diversification Opportunities for UNIVERSAL PARTNERS and LUX ISLAND

0.0

Correlation Coefficient

UNIVERSAL PARTNERS  LUX ISLAND

Pay attention - limited upside

The 3 months correlation between UNIVERSAL and LUX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL PARTNERS LTD and LUX ISLAND RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUX ISLAND RESORTS 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 LTD are associated (or correlated) with LUX ISLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUX ISLAND RESORTS has no effect on the direction of UNIVERSAL PARTNERS i.e., UNIVERSAL PARTNERS and LUX ISLAND go up and down completely randomly.

Pair Corralation between UNIVERSAL PARTNERS and LUX ISLAND

Assuming the 90 days trading horizon UNIVERSAL PARTNERS LTD is expected to under-perform the LUX ISLAND. But the stock apears to be less risky and, when comparing its historical volatility, UNIVERSAL PARTNERS LTD is 2.82 times less risky than LUX ISLAND. The stock trades about -0.05 of its potential returns per unit of risk. The LUX ISLAND RESORTS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,591  in LUX ISLAND RESORTS on October 26, 2024 and sell it today you would earn a total of  909.00  from holding LUX ISLAND RESORTS or generate 19.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.06%
Values	Daily Returns

UNIVERSAL PARTNERS LTD  vs.  LUX ISLAND RESORTS

UNIVERSAL PARTNERS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIVERSAL PARTNERS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, UNIVERSAL PARTNERS is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

LUX ISLAND RESORTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LUX ISLAND RESORTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, LUX ISLAND is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UNIVERSAL PARTNERS and LUX ISLAND

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

The idea behind UNIVERSAL PARTNERS LTD and LUX ISLAND RESORTS 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.