Correlation Between URU Metals and Unite Group

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

By analyzing existing cross correlation between URU Metals and Unite Group PLC, you can compare the effects of market volatilities on URU Metals and Unite Group 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 Unite Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of URU Metals and Unite Group.

Diversification Opportunities for URU Metals and Unite Group

-0.76

Correlation Coefficient

URU Metals  Unite Group

Pay attention - limited upside

The 3 months correlation between URU and Unite is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding URU Metals and Unite Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unite Group PLC 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 Unite Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unite Group PLC has no effect on the direction of URU Metals i.e., URU Metals and Unite Group go up and down completely randomly.

Pair Corralation between URU Metals and Unite Group

Assuming the 90 days trading horizon URU Metals is expected to under-perform the Unite Group. In addition to that, URU Metals is 3.19 times more volatile than Unite Group PLC. It trades about -0.15 of its total potential returns per unit of risk. Unite Group PLC is currently generating about -0.15 per unit of volatility. If you would invest  83,500  in Unite Group PLC on October 10, 2024 and sell it today you would lose (2,250) from holding Unite Group PLC or give up 2.69% of portfolio value over 90 days.

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

URU Metals  vs.  Unite Group PLC

URU Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in URU Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, URU Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Unite Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unite Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with URU Metals and Unite Group

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

The idea behind URU Metals and Unite Group 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 CEOs Directory module to screen CEOs from public companies around the world.