Correlation Between Universal and Ladybug Resource

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

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

Diversification Opportunities for Universal and Ladybug Resource

-0.81

Correlation Coefficient

Universal  Ladybug Resource

Pay attention - limited upside

The 3 months correlation between Universal and Ladybug is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Ladybug Resource Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladybug Resource and Universal 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 Universal are associated (or correlated) with Ladybug Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladybug Resource has no effect on the direction of Universal i.e., Universal and Ladybug Resource go up and down completely randomly.

Pair Corralation between Universal and Ladybug Resource

Considering the 90-day investment horizon Universal is expected to generate 16.7 times less return on investment than Ladybug Resource. But when comparing it to its historical volatility, Universal is 8.64 times less risky than Ladybug Resource. It trades about 0.04 of its potential returns per unit of risk. Ladybug Resource Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Ladybug Resource Group on September 30, 2024 and sell it today you would earn a total of  0.10  from holding Ladybug Resource Group or generate 16.67% return on investment over 90 days.

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

Universal  vs.  Ladybug Resource Group

Universal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ladybug Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladybug Resource Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ladybug Resource is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal and Ladybug Resource

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

The idea behind Universal and Ladybug Resource Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.