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
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.
SNDL Inc vs. UOL Group Ltd
Pair Trading with SNDL and UOL GroupThe 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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