Correlation Between Ucommune International and Geo

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

By analyzing existing cross correlation between Ucommune International and Geo Group, you can compare the effects of market volatilities on Ucommune International and Geo 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 Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ucommune International and Geo.

Diversification Opportunities for Ucommune International and Geo

-0.72

Correlation Coefficient

Ucommune International  Geo

Pay attention - limited upside

The 3 months correlation between Ucommune and Geo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ucommune International and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Ucommune International i.e., Ucommune International and Geo go up and down completely randomly.

Pair Corralation between Ucommune International and Geo

Allowing for the 90-day total investment horizon Ucommune International is expected to under-perform the Geo. In addition to that, Ucommune International is 1.78 times more volatile than Geo Group. It trades about -0.05 of its total potential returns per unit of risk. Geo Group is currently generating about -0.08 per unit of volatility. If you would invest  1,514  in Geo Group on February 5, 2024 and sell it today you would lose (49.00) from holding Geo Group or give up 3.24% of portfolio value over 90 days.

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

Ucommune International  vs.  Geo Group

Ucommune International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ucommune International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ucommune International is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Geo Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ucommune International and Geo

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

The idea behind Ucommune International and Geo Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.