Correlation Between Encore Capital and UOBSP

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Can any of the company-specific risk be diversified away by investing in both Encore Capital and UOBSP 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 Encore Capital and UOBSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Capital Group and UOBSP 3863 07 OCT 32, you can compare the effects of market volatilities on Encore Capital and UOBSP 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 Encore Capital with a short position of UOBSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and UOBSP.

Diversification Opportunities for Encore Capital and UOBSP

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Encore and UOBSP is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and UOBSP 3863 07 OCT 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOBSP 3863 07 and Encore Capital 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 Encore Capital Group are associated (or correlated) with UOBSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UOBSP 3863 07 has no effect on the direction of Encore Capital i.e., Encore Capital and UOBSP go up and down completely randomly.

Pair Corralation between Encore Capital and UOBSP

Given the investment horizon of 90 days Encore Capital Group is expected to generate 6.68 times more return on investment than UOBSP. However, Encore Capital is 6.68 times more volatile than UOBSP 3863 07 OCT 32. It trades about 0.09 of its potential returns per unit of risk. UOBSP 3863 07 OCT 32 is currently generating about 0.0 per unit of risk. If you would invest  4,752  in Encore Capital Group on October 25, 2024 and sell it today you would earn a total of  106.00  from holding Encore Capital Group or generate 2.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy44.44%
ValuesDaily Returns

Encore Capital Group  vs.  UOBSP 3863 07 OCT 32

 Performance 
       Timeline  
Encore Capital Group 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Encore Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.
UOBSP 3863 07 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in UOBSP 3863 07 OCT 32 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UOBSP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Encore Capital and UOBSP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Encore Capital and UOBSP

The main advantage of trading using opposite Encore Capital and UOBSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, UOBSP 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 UOBSP will offset losses from the drop in UOBSP's long position.
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The idea behind Encore Capital Group and UOBSP 3863 07 OCT 32 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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