Correlation Between UPP and PURA

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

Diversification Opportunities for UPP and PURA

UPPPURADiversified AwayUPPPURADiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between UPP and PURA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UPP and PURA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURA and UPP 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 UPP are associated (or correlated) with PURA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURA has no effect on the direction of UPP i.e., UPP and PURA go up and down completely randomly.

Pair Corralation between UPP and PURA

If you would invest  9.56  in UPP on November 23, 2024 and sell it today you would lose (0.53) from holding UPP or give up 5.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

UPP  vs.  PURA

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-200
JavaScript chart by amCharts 3.21.15UPP PURA
       Timeline  
UPP 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in UPP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UPP exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.030.040.050.060.070.080.09
PURA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days PURA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, PURA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

UPP and PURA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-120.79-90.47-60.14-29.820.5131.2162.9494.68126.41 0.000050.000100.000150.000200.00025
JavaScript chart by amCharts 3.21.15UPP PURA
       Returns  

Pair Trading with UPP and PURA

The main advantage of trading using opposite UPP and PURA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPP position performs unexpectedly, PURA 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 PURA will offset losses from the drop in PURA's long position.
The idea behind UPP and PURA 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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