Correlation Between UPDC PLC and VITAFOAM NIGERIA

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

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

Diversification Opportunities for UPDC PLC and VITAFOAM NIGERIA

0.86

Correlation Coefficient

UPDC PLC  VITAFOAM NIGERIA

Very poor diversification

The 3 months correlation between UPDC and VITAFOAM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding UPDC PLC and VITAFOAM NIGERIA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITAFOAM NIGERIA PLC and UPDC 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 UPDC PLC are associated (or correlated) with VITAFOAM NIGERIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITAFOAM NIGERIA PLC has no effect on the direction of UPDC PLC i.e., UPDC PLC and VITAFOAM NIGERIA go up and down completely randomly.

Pair Corralation between UPDC PLC and VITAFOAM NIGERIA

Assuming the 90 days trading horizon UPDC PLC is expected to generate 1.28 times more return on investment than VITAFOAM NIGERIA. However, UPDC PLC is 1.28 times more volatile than VITAFOAM NIGERIA PLC. It trades about 0.23 of its potential returns per unit of risk. VITAFOAM NIGERIA PLC is currently generating about 0.25 per unit of risk. If you would invest  315.00  in UPDC PLC on May 1, 2025 and sell it today you would earn a total of  238.00  from holding UPDC PLC or generate 75.56% return on investment over 90 days.

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

UPDC PLC  vs.  VITAFOAM NIGERIA PLC

UPDC PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UPDC PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, UPDC PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

VITAFOAM NIGERIA PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VITAFOAM NIGERIA PLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, VITAFOAM NIGERIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UPDC PLC and VITAFOAM NIGERIA

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

The idea behind UPDC PLC and VITAFOAM NIGERIA PLC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.