Correlation Between Energy Focu and Applied UV

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

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

Diversification Opportunities for Energy Focu and Applied UV

-0.13

Correlation Coefficient

Energy Focu  Applied UV

Good diversification

The 3 months correlation between Energy and Applied is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and Applied UV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied UV and Energy Focu 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 Energy Focu are associated (or correlated) with Applied UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied UV has no effect on the direction of Energy Focu i.e., Energy Focu and Applied UV go up and down completely randomly.

Pair Corralation between Energy Focu and Applied UV

Given the investment horizon of 90 days Energy Focu is expected to generate 0.79 times more return on investment than Applied UV. However, Energy Focu is 1.27 times less risky than Applied UV. It trades about -0.01 of its potential returns per unit of risk. Applied UV is currently generating about -0.16 per unit of risk. If you would invest  343.00  in Energy Focu on January 24, 2024 and sell it today you would lose (200.00) from holding Energy Focu or give up 58.31% of portfolio value over 90 days.

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

Energy Focu  vs.  Applied UV

Energy Focu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Applied UV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied UV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Energy Focu and Applied UV

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

The idea behind Energy Focu and Applied UV 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.