Correlation Between TS Investment and UIL

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

By analyzing existing cross correlation between TS Investment Corp and UIL Co, you can compare the effects of market volatilities on TS Investment and UIL 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 TS Investment with a short position of UIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TS Investment and UIL.

Diversification Opportunities for TS Investment and UIL

0.91

Correlation Coefficient

TS Investment  UIL

Almost no diversification

The 3 months correlation between 246690 and UIL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TS Investment Corp and UIL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UIL Co and TS Investment 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 TS Investment Corp are associated (or correlated) with UIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UIL Co has no effect on the direction of TS Investment i.e., TS Investment and UIL go up and down completely randomly.

Pair Corralation between TS Investment and UIL

Assuming the 90 days trading horizon TS Investment Corp is expected to generate 1.2 times more return on investment than UIL. However, TS Investment is 1.2 times more volatile than UIL Co. It trades about 0.01 of its potential returns per unit of risk. UIL Co is currently generating about -0.01 per unit of risk. If you would invest  102,800  in TS Investment Corp on September 16, 2024 and sell it today you would lose (1,400) from holding TS Investment Corp or give up 1.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

TS Investment Corp  vs.  UIL Co

TS Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TS Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TS Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UIL Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UIL Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UIL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TS Investment and UIL

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

The idea behind TS Investment Corp and UIL Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.