Correlation Between London Security and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both London Security and Uber Technologies 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 London Security and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Uber Technologies, you can compare the effects of market volatilities on London Security and Uber Technologies 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 London Security with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Uber Technologies.
Diversification Opportunities for London Security and Uber Technologies
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between London and Uber is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and London Security 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 London Security Plc are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of London Security i.e., London Security and Uber Technologies go up and down completely randomly.
Pair Corralation between London Security and Uber Technologies
Assuming the 90 days trading horizon London Security is expected to generate 3.22 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, London Security Plc is 1.67 times less risky than Uber Technologies. It trades about 0.05 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,496 in Uber Technologies on August 29, 2024 and sell it today you would earn a total of 2,734 from holding Uber Technologies or generate 60.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.65% |
| Values | Daily Returns |
London Security Plc vs. Uber Technologies
Performance |
| Timeline |
| London Security Plc |
| Uber Technologies |
London Security and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Uber Technologies
The main advantage of trading using opposite London Security and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.| London Security vs. Aberdeen Diversified Income | London Security vs. Molson Coors Beverage | London Security vs. Fevertree Drinks Plc | London Security vs. Gamma Communications PLC |
| Uber Technologies vs. Samsung Electronics Co | Uber Technologies vs. Samsung Electronics Co | Uber Technologies vs. Toyota Motor Corp | Uber Technologies vs. Reliance Industries Ltd |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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