Correlation Between UPS CDR and Rakovina Therapeutics

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

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

Diversification Opportunities for UPS CDR and Rakovina Therapeutics

0.27

Correlation Coefficient

UPS CDR  Rakovina Therapeutics

Modest diversification

The 3 months correlation between UPS and Rakovina is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and Rakovina Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rakovina Therapeutics and UPS CDR 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 UPS CDR are associated (or correlated) with Rakovina Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rakovina Therapeutics has no effect on the direction of UPS CDR i.e., UPS CDR and Rakovina Therapeutics go up and down completely randomly.

Pair Corralation between UPS CDR and Rakovina Therapeutics

Assuming the 90 days trading horizon UPS CDR is expected to generate 0.28 times more return on investment than Rakovina Therapeutics. However, UPS CDR is 3.6 times less risky than Rakovina Therapeutics. It trades about -0.04 of its potential returns per unit of risk. Rakovina Therapeutics is currently generating about -0.05 per unit of risk. If you would invest  1,617  in UPS CDR on December 20, 2024 and sell it today you would lose (100.00) from holding UPS CDR or give up 6.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

UPS CDR  vs.  Rakovina Therapeutics

UPS CDR

Risk-Adjusted Performance

Very Weak

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

Rakovina Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rakovina Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with UPS CDR and Rakovina Therapeutics

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

The idea behind UPS CDR and Rakovina Therapeutics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.