Correlation Between Uniphar Group and Draper Esprit

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

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

Diversification Opportunities for Uniphar Group and Draper Esprit

0.46

Correlation Coefficient

Uniphar Group  Draper Esprit

Very weak diversification

The 3 months correlation between Uniphar and Draper is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Uniphar Group PLC and Draper Esprit plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Draper Esprit plc and Uniphar 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 Uniphar Group PLC are associated (or correlated) with Draper Esprit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Draper Esprit plc has no effect on the direction of Uniphar Group i.e., Uniphar Group and Draper Esprit go up and down completely randomly.

Pair Corralation between Uniphar Group and Draper Esprit

Assuming the 90 days trading horizon Uniphar Group PLC is expected to generate 0.92 times more return on investment than Draper Esprit. However, Uniphar Group PLC is 1.09 times less risky than Draper Esprit. It trades about 0.14 of its potential returns per unit of risk. Draper Esprit plc is currently generating about 0.01 per unit of risk. If you would invest  210.00  in Uniphar Group PLC on December 21, 2024 and sell it today you would earn a total of  52.00  from holding Uniphar Group PLC or generate 24.76% return on investment over 90 days.

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

Uniphar Group PLC  vs.  Draper Esprit plc

Uniphar Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uniphar Group PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Uniphar Group reported solid returns over the last few months and may actually be approaching a breakup point.

Draper Esprit plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Draper Esprit plc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Draper Esprit is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Uniphar Group and Draper Esprit

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

The idea behind Uniphar Group PLC and Draper Esprit plc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .