Correlation Between UQC and EXPAND

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

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

Diversification Opportunities for UQC and EXPAND

0.31

Correlation Coefficient

UQC  EXPAND

Weak diversification

The 3 months correlation between UQC and EXPAND is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding UQC and EXPAND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPAND 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 EXPAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPAND has no effect on the direction of UQC i.e., UQC and EXPAND go up and down completely randomly.

Pair Corralation between UQC and EXPAND

Assuming the 90 days trading horizon UQC is expected to generate 4.26 times less return on investment than EXPAND. But when comparing it to its historical volatility, UQC is 1.34 times less risky than EXPAND. It trades about 0.05 of its potential returns per unit of risk. EXPAND is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.00  in EXPAND on February 8, 2025 and sell it today you would earn a total of  0.00  from holding EXPAND or generate 86.96% return on investment over 90 days.

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

UQC  vs.  EXPAND

UQC

Risk-Adjusted Performance

Very Weak

Over the last 90 days UQC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for UQC shareholders.

EXPAND

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EXPAND are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EXPAND sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UQC and EXPAND

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

The idea behind UQC and EXPAND 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.