Correlation Between UET United and InterContinental

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both UET United and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on UET United and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and InterContinental.

Diversification Opportunities for UET United and InterContinental

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between UET and InterContinental is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of UET United i.e., UET United and InterContinental go up and down completely randomly.

Pair Corralation between UET United and InterContinental

Assuming the 90 days trading horizon UET United Electronic is expected to generate 3.21 times more return on investment than InterContinental. However, UET United is 3.21 times more volatile than InterContinental Hotels Group. It trades about 0.04 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.12 per unit of risk. If you would invest  75.00  in UET United Electronic on August 26, 2024 and sell it today you would earn a total of  35.00  from holding UET United Electronic or generate 46.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

UET United Electronic  vs.  InterContinental Hotels Group

 Performance 
       Timeline  
UET United Electronic 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in UET United Electronic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, UET United unveiled solid returns over the last few months and may actually be approaching a breakup point.
InterContinental Hotels 

Risk-Adjusted Performance

26 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, InterContinental reported solid returns over the last few months and may actually be approaching a breakup point.

UET United and InterContinental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UET United and InterContinental

The main advantage of trading using opposite UET United and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.
The idea behind UET United Electronic and InterContinental Hotels 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Money Managers
Screen money managers from public funds and ETFs managed around the world
Transaction History
View history of all your transactions and understand their impact on performance
Equity Valuation
Check real value of public entities based on technical and fundamental data
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like