Correlation Between UIE PLC and Jeudan

Can any of the company-specific risk be diversified away by investing in both UIE PLC and Jeudan 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 UIE PLC and Jeudan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UIE PLC and Jeudan, you can compare the effects of market volatilities on UIE PLC and Jeudan 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 UIE PLC with a short position of Jeudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of UIE PLC and Jeudan.

Diversification Opportunities for UIE PLC and Jeudan

-0.74

Correlation Coefficient

UIE PLC  Jeudan

Pay attention - limited upside

The 3 months correlation between UIE and Jeudan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding UIE PLC and Jeudan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeudan and UIE PLC 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 UIE PLC are associated (or correlated) with Jeudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeudan has no effect on the direction of UIE PLC i.e., UIE PLC and Jeudan go up and down completely randomly.

Pair Corralation between UIE PLC and Jeudan

Assuming the 90 days trading horizon UIE PLC is expected to generate 0.6 times more return on investment than Jeudan. However, UIE PLC is 1.66 times less risky than Jeudan. It trades about 0.06 of its potential returns per unit of risk. Jeudan is currently generating about -0.02 per unit of risk. If you would invest  17,381  in UIE PLC on February 5, 2024 and sell it today you would earn a total of  4,719  from holding UIE PLC or generate 27.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

UIE PLC  vs.  Jeudan

UIE PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UIE PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, UIE PLC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Jeudan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeudan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with UIE PLC and Jeudan

The main advantage of trading using opposite UIE PLC and Jeudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UIE PLC position performs unexpectedly, Jeudan 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 Jeudan will offset losses from the drop in Jeudan's long position.

The idea behind UIE PLC and Jeudan 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.