Correlation Between Ucommune International and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Ucommune International and Sparta Capital 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 Ucommune International and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ucommune International and Sparta Capital, you can compare the effects of market volatilities on Ucommune International and Sparta Capital 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 Ucommune International with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ucommune International and Sparta Capital.
Diversification Opportunities for Ucommune International and Sparta Capital
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ucommune and Sparta is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ucommune International and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Ucommune International 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 Ucommune International are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Ucommune International i.e., Ucommune International and Sparta Capital go up and down completely randomly.
Pair Corralation between Ucommune International and Sparta Capital
Assuming the 90 days horizon Ucommune International is expected to generate 1.85 times more return on investment than Sparta Capital. However, Ucommune International is 1.85 times more volatile than Sparta Capital. It trades about -0.05 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.22 per unit of risk. If you would invest 1.20 in Ucommune International on August 27, 2024 and sell it today you would lose (0.20) from holding Ucommune International or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ucommune International vs. Sparta Capital
Performance |
| Timeline |
| Ucommune International |
| Sparta Capital |
Ucommune International and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ucommune International and Sparta Capital
The main advantage of trading using opposite Ucommune International and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ucommune International position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| Ucommune International vs. Plexus Corp | Ucommune International vs. Jabil Circuit | Ucommune International vs. Sanmina | Ucommune International vs. Methode Electronics |
| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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