Correlation Between UIE PLC and International Business
Can any of the company-specific risk be diversified away by investing in both UIE PLC and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UIE PLC and International Business Machines, you can compare the effects of market volatilities on UIE PLC and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of UIE PLC and International Business.
Diversification Opportunities for UIE PLC and International Business
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between UIE and International is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding UIE PLC and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of UIE PLC i.e., UIE PLC and International Business go up and down completely randomly.
Pair Corralation between UIE PLC and International Business
Assuming the 90 days trading horizon UIE PLC is expected to generate 1.06 times more return on investment than International Business. However, UIE PLC is 1.06 times more volatile than International Business Machines. It trades about 0.39 of its potential returns per unit of risk. International Business Machines is currently generating about -0.33 per unit of risk. If you would invest 20,900 in UIE PLC on January 20, 2024 and sell it today you would earn a total of 1,500 from holding UIE PLC or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
UIE PLC vs. International Business Machine
Performance |
| Timeline |
| UIE PLC |
| International Business |
UIE PLC and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UIE PLC and International Business
The main advantage of trading using opposite UIE PLC and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UIE PLC position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| UIE PLC vs. Per Aarsleff Holding | UIE PLC vs. Schouw Co | UIE PLC vs. Ringkjoebing Landbobank AS | UIE PLC vs. Jeudan |
| International Business vs. Information Services Group | International Business vs. Home Bancorp | International Business vs. CRA International | International Business vs. Aquagold International |
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 Stocks Directory module to find actively traded stocks across global markets.
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