Correlation Between Universal and 50249AAA1

Can any of the company-specific risk be diversified away by investing in both Universal and 50249AAA1 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 50249AAA1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal and LYB INTERNATIONAL FINANCE, you can compare the effects of market volatilities on Universal and 50249AAA1 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 50249AAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and 50249AAA1.

Diversification Opportunities for Universal and 50249AAA1

-0.04

Correlation Coefficient

Universal  50249AAA1

Good diversification

The 3 months correlation between Universal and 50249AAA1 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Universal and LYB INTERNATIONAL FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTERNATIONAL FINANCE 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 50249AAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTERNATIONAL FINANCE has no effect on the direction of Universal i.e., Universal and 50249AAA1 go up and down completely randomly.

Pair Corralation between Universal and 50249AAA1

Considering the 90-day investment horizon Universal is expected to generate 1.24 times more return on investment than 50249AAA1. However, Universal is 1.24 times more volatile than LYB INTERNATIONAL FINANCE. It trades about 0.04 of its potential returns per unit of risk. LYB INTERNATIONAL FINANCE is currently generating about 0.02 per unit of risk. If you would invest  4,948  in Universal on October 23, 2024 and sell it today you would earn a total of  155.00  from holding Universal or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Universal  vs.  LYB INTERNATIONAL FINANCE

Universal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 3 (%) 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

LYB INTERNATIONAL FINANCE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LYB INTERNATIONAL FINANCE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 50249AAA1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal and 50249AAA1

The main advantage of trading using opposite Universal and 50249AAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, 50249AAA1 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 50249AAA1 will offset losses from the drop in 50249AAA1's long position.

The idea behind Universal and LYB INTERNATIONAL FINANCE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.