Correlation Between SANOK RUBBER and United Utilities
Can any of the company-specific risk be diversified away by investing in both SANOK RUBBER and United Utilities 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 SANOK RUBBER and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANOK RUBBER ZY and United Utilities Group, you can compare the effects of market volatilities on SANOK RUBBER and United Utilities 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 SANOK RUBBER with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOK RUBBER and United Utilities.
Diversification Opportunities for SANOK RUBBER and United Utilities
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SANOK and United is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SANOK RUBBER ZY and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and SANOK RUBBER 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 SANOK RUBBER ZY are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of SANOK RUBBER i.e., SANOK RUBBER and United Utilities go up and down completely randomly.
Pair Corralation between SANOK RUBBER and United Utilities
Assuming the 90 days horizon SANOK RUBBER ZY is expected to generate 1.72 times more return on investment than United Utilities. However, SANOK RUBBER is 1.72 times more volatile than United Utilities Group. It trades about 0.08 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.03 per unit of risk. If you would invest 166.00 in SANOK RUBBER ZY on September 1, 2024 and sell it today you would earn a total of 279.00 from holding SANOK RUBBER ZY or generate 168.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANOK RUBBER ZY vs. United Utilities Group
Performance |
| Timeline |
| SANOK RUBBER ZY |
| United Utilities |
SANOK RUBBER and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANOK RUBBER and United Utilities
The main advantage of trading using opposite SANOK RUBBER and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANOK RUBBER position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| SANOK RUBBER vs. United Utilities Group | SANOK RUBBER vs. DELTA AIR LINES | SANOK RUBBER vs. SEALED AIR | SANOK RUBBER vs. The Hanover Insurance |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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