Correlation Between UET United and British American
Can any of the company-specific risk be diversified away by investing in both UET United and British American 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 UET United and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and British American Tobacco, you can compare the effects of market volatilities on UET United and British American 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 UET United with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and British American.
Diversification Opportunities for UET United and British American
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UET and British is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and UET United 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 UET United Electronic are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of UET United i.e., UET United and British American go up and down completely randomly.
Pair Corralation between UET United and British American
Assuming the 90 days trading horizon UET United is expected to generate 1.87 times less return on investment than British American. In addition to that, UET United is 3.65 times more volatile than British American Tobacco. It trades about 0.02 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.11 per unit of volatility. If you would invest 3,276 in British American Tobacco on November 2, 2024 and sell it today you would earn a total of 524.00 from holding British American Tobacco or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.04% |
| Values | Daily Returns |
UET United Electronic vs. British American Tobacco
Performance |
| Timeline |
| UET United Electronic |
| British American Tobacco |
UET United and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and British American
The main advantage of trading using opposite UET United and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| UET United vs. MTY Food Group | UET United vs. CarsalesCom | UET United vs. Cal Maine Foods | UET United vs. Lamar Advertising |
| British American vs. Algonquin Power Utilities | British American vs. Cleanaway Waste Management | British American vs. Moneysupermarket Group PLC | British American vs. United Utilities Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |