Correlation Between Rand Capital and UOL Group
Can any of the company-specific risk be diversified away by investing in both Rand Capital and UOL Group 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 Rand Capital and UOL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rand Capital Corp and UOL Group Ltd, you can compare the effects of market volatilities on Rand Capital and UOL Group 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 Rand Capital with a short position of UOL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and UOL Group.
Diversification Opportunities for Rand Capital and UOL Group
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rand and UOL is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and UOL Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOL Group and Rand Capital 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 Rand Capital Corp are associated (or correlated) with UOL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UOL Group has no effect on the direction of Rand Capital i.e., Rand Capital and UOL Group go up and down completely randomly.
Pair Corralation between Rand Capital and UOL Group
Given the investment horizon of 90 days Rand Capital Corp is expected to generate 2.5 times more return on investment than UOL Group. However, Rand Capital is 2.5 times more volatile than UOL Group Ltd. It trades about 0.03 of its potential returns per unit of risk. UOL Group Ltd is currently generating about -0.01 per unit of risk. If you would invest 1,248 in Rand Capital Corp on January 19, 2024 and sell it today you would earn a total of 139.00 from holding Rand Capital Corp or generate 11.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 84.99% |
Values | Daily Returns |
Rand Capital Corp vs. UOL Group Ltd
Performance |
Timeline |
Rand Capital Corp |
UOL Group |
Rand Capital and UOL Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rand Capital and UOL Group
The main advantage of trading using opposite Rand Capital and UOL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital position performs unexpectedly, UOL Group 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 UOL Group will offset losses from the drop in UOL Group's long position.Rand Capital vs. Blackstone Gso Long | Rand Capital vs. First Trust Senior | Rand Capital vs. Eaton Vance Senior | Rand Capital vs. Princeton Capital |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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