Correlation Between Seraphim Space and United Utilities
Can any of the company-specific risk be diversified away by investing in both Seraphim Space and United Utilities 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 Seraphim Space and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seraphim Space Investment and United Utilities Group, you can compare the effects of market volatilities on Seraphim Space and United Utilities 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 Seraphim Space with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seraphim Space and United Utilities.
Diversification Opportunities for Seraphim Space and United Utilities
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seraphim and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Seraphim Space Investment and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Seraphim Space 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 Seraphim Space Investment are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Seraphim Space i.e., Seraphim Space and United Utilities go up and down completely randomly.
Pair Corralation between Seraphim Space and United Utilities
Assuming the 90 days trading horizon Seraphim Space Investment is expected to generate 1.02 times more return on investment than United Utilities. However, Seraphim Space is 1.02 times more volatile than United Utilities Group. It trades about -0.04 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.2 per unit of risk. If you would invest 5,390 in Seraphim Space Investment on October 29, 2024 and sell it today you would lose (90.00) from holding Seraphim Space Investment or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seraphim Space Investment vs. United Utilities Group
Performance |
| Timeline |
| Seraphim Space Investment |
| United Utilities |
Seraphim Space and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seraphim Space and United Utilities
The main advantage of trading using opposite Seraphim Space and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seraphim Space position performs unexpectedly, United Utilities 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 Utilities will offset losses from the drop in United Utilities' long position.| Seraphim Space vs. SupplyMe Capital PLC | Seraphim Space vs. Premier African Minerals | Seraphim Space vs. SANTANDER UK 8 | Seraphim Space vs. Tower Resources plc |
| United Utilities vs. Fevertree Drinks Plc | United Utilities vs. Live Nation Entertainment | United Utilities vs. Centaur Media | United Utilities vs. Supermarket Income REIT |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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