Correlation Between SNDL and UOL Group

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Can any of the company-specific risk be diversified away by investing in both SNDL 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 SNDL and UOL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and UOL Group, you can compare the effects of market volatilities on SNDL 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 SNDL with a short position of UOL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and UOL Group.

Diversification Opportunities for SNDL and UOL Group

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between SNDL and UOL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and UOL Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UOL Group and SNDL 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 SNDL Inc 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 SNDL i.e., SNDL and UOL Group go up and down completely randomly.

Pair Corralation between SNDL and UOL Group

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the UOL Group. In addition to that, SNDL is 2.09 times more volatile than UOL Group. It trades about -0.05 of its total potential returns per unit of risk. UOL Group is currently generating about -0.03 per unit of volatility. If you would invest  1,865  in UOL Group on November 24, 2023 and sell it today you would lose (25.00) from holding UOL Group or give up 1.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SNDL Inc  vs.  UOL Group Ltd

 Performance 
       Timeline  
SNDL Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, SNDL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
UOL Group 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in UOL Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, UOL Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SNDL and UOL Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SNDL and UOL Group

The main advantage of trading using opposite SNDL and UOL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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.
The idea behind SNDL Inc and UOL Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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