Correlation Between VITAFOAM NIGERIA and UPDC PLC

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

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

Diversification Opportunities for VITAFOAM NIGERIA and UPDC PLC

0.84

Correlation Coefficient

VITAFOAM NIGERIA  UPDC PLC

Very poor diversification

The 3 months correlation between VITAFOAM and UPDC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding VITAFOAM NIGERIA PLC and UPDC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDC PLC and VITAFOAM NIGERIA 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 VITAFOAM NIGERIA PLC are associated (or correlated) with UPDC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDC PLC has no effect on the direction of VITAFOAM NIGERIA i.e., VITAFOAM NIGERIA and UPDC PLC go up and down completely randomly.

Pair Corralation between VITAFOAM NIGERIA and UPDC PLC

Assuming the 90 days trading horizon VITAFOAM NIGERIA is expected to generate 1.11 times less return on investment than UPDC PLC. But when comparing it to its historical volatility, VITAFOAM NIGERIA PLC is 1.24 times less risky than UPDC PLC. It trades about 0.24 of its potential returns per unit of risk. UPDC PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  313.00  in UPDC PLC on May 4, 2025 and sell it today you would earn a total of  227.00  from holding UPDC PLC or generate 72.52% return on investment over 90 days.

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

VITAFOAM NIGERIA PLC  vs.  UPDC PLC

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 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, VITAFOAM NIGERIA sustained solid returns over the last few months and may actually be approaching a breakup point.

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 conflicting fundamental indicators, UPDC PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VITAFOAM NIGERIA and UPDC PLC

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

The idea behind VITAFOAM NIGERIA PLC and UPDC 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.