Correlation Between USWE Sports and Train Alliance

Can any of the company-specific risk be diversified away by investing in both USWE Sports and Train Alliance 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 USWE Sports and Train Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between USWE Sports AB and Train Alliance Sweden, you can compare the effects of market volatilities on USWE Sports and Train Alliance 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 USWE Sports with a short position of Train Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE Sports and Train Alliance.

Diversification Opportunities for USWE Sports and Train Alliance

0.46

Correlation Coefficient

USWE Sports  Train Alliance

Very weak diversification

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

Pair Corralation between USWE Sports and Train Alliance

Assuming the 90 days trading horizon USWE Sports AB is expected to generate 1.54 times more return on investment than Train Alliance. However, USWE Sports is 1.54 times more volatile than Train Alliance Sweden. It trades about -0.01 of its potential returns per unit of risk. Train Alliance Sweden is currently generating about -0.14 per unit of risk. If you would invest  905.00  in USWE Sports AB on December 30, 2024 and sell it today you would lose (30.00) from holding USWE Sports AB or give up 3.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

USWE Sports AB  vs.  Train Alliance Sweden

USWE Sports AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days USWE Sports AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, USWE Sports is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Train Alliance Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Train Alliance Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with USWE Sports and Train Alliance

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

The idea behind USWE Sports AB and Train Alliance Sweden 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.