Correlation Between Lees Pharmaceutical and United Parks
Can any of the company-specific risk be diversified away by investing in both Lees Pharmaceutical and United Parks 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 Lees Pharmaceutical and United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lees Pharmaceutical Holdings and United Parks Resorts, you can compare the effects of market volatilities on Lees Pharmaceutical and United Parks 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 Lees Pharmaceutical with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lees Pharmaceutical and United Parks.
Diversification Opportunities for Lees Pharmaceutical and United Parks
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lees and United is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lees Pharmaceutical Holdings and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts and Lees Pharmaceutical 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 Lees Pharmaceutical Holdings are associated (or correlated) with United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Lees Pharmaceutical i.e., Lees Pharmaceutical and United Parks go up and down completely randomly.
Pair Corralation between Lees Pharmaceutical and United Parks
Assuming the 90 days horizon Lees Pharmaceutical Holdings is expected to under-perform the United Parks. In addition to that, Lees Pharmaceutical is 37.84 times more volatile than United Parks Resorts. It trades about -0.09 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.02 per unit of volatility. If you would invest 5,471 in United Parks Resorts on September 3, 2024 and sell it today you would earn a total of 393.00 from holding United Parks Resorts or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 28.89% |
| Values | Daily Returns |
Lees Pharmaceutical Holdings vs. United Parks Resorts
Performance |
| Timeline |
| Lees Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| United Parks Resorts |
Lees Pharmaceutical and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lees Pharmaceutical and United Parks
The main advantage of trading using opposite Lees Pharmaceutical and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lees Pharmaceutical position performs unexpectedly, United Parks 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 Parks will offset losses from the drop in United Parks' long position.| Lees Pharmaceutical vs. Sea | Lees Pharmaceutical vs. Uber Technologies | Lees Pharmaceutical vs. Hudson Pacific Properties | Lees Pharmaceutical vs. Skechers USA |
| United Parks vs. Transportadora de Gas | United Parks vs. NiSource | United Parks vs. PGE Corp | United Parks vs. Integral Ad Science |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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