Correlation Between UQC and BounceBit
Can any of the company-specific risk be diversified away by investing in both UQC and BounceBit 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 UQC and BounceBit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UQC and BounceBit, you can compare the effects of market volatilities on UQC and BounceBit 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 UQC with a short position of BounceBit. Check out your portfolio center. Please also check ongoing floating volatility patterns of UQC and BounceBit.
Diversification Opportunities for UQC and BounceBit
Average diversification
The 3 months correlation between UQC and BounceBit is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding UQC and BounceBit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BounceBit and UQC 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 UQC are associated (or correlated) with BounceBit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BounceBit has no effect on the direction of UQC i.e., UQC and BounceBit go up and down completely randomly.
Pair Corralation between UQC and BounceBit
Assuming the 90 days trading horizon UQC is expected to generate 1.22 times less return on investment than BounceBit. In addition to that, UQC is 1.85 times more volatile than BounceBit. It trades about 0.14 of its total potential returns per unit of risk. BounceBit is currently generating about 0.32 per unit of volatility. If you would invest 26.00 in BounceBit on September 4, 2024 and sell it today you would earn a total of 14.00 from holding BounceBit or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UQC vs. BounceBit
Performance |
| Timeline |
| UQC |
| BounceBit |
UQC and BounceBit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UQC and BounceBit
The main advantage of trading using opposite UQC and BounceBit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UQC position performs unexpectedly, BounceBit 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 BounceBit will offset losses from the drop in BounceBit's long position.The idea behind UQC and BounceBit 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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