Correlation Between URU Metals and Litigation Capital

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

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

Diversification Opportunities for URU Metals and Litigation Capital

-0.1

Correlation Coefficient

URU Metals  Litigation Capital

Good diversification

The 3 months correlation between URU and Litigation is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding URU Metals and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital and URU Metals 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 URU Metals are associated (or correlated) with Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of URU Metals i.e., URU Metals and Litigation Capital go up and down completely randomly.

Pair Corralation between URU Metals and Litigation Capital

Assuming the 90 days trading horizon URU Metals is expected to generate 2.47 times more return on investment than Litigation Capital. However, URU Metals is 2.47 times more volatile than Litigation Capital Management. It trades about 0.18 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.25 per unit of risk. If you would invest  13,500  in URU Metals on September 22, 2024 and sell it today you would earn a total of  2,500  from holding URU Metals or generate 18.52% return on investment over 90 days.

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

URU Metals  vs.  Litigation Capital Management

URU Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in URU Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, URU Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Litigation Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Litigation Capital Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Litigation Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with URU Metals and Litigation Capital

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

The idea behind URU Metals and Litigation Capital Management 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 Stocks Directory module to find actively traded stocks across global markets.