Correlation Between Universal Entertainment and CHIBA BANK

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

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

Diversification Opportunities for Universal Entertainment and CHIBA BANK

-0.31

Correlation Coefficient

Universal Entertainment  CHIBA BANK

Very good diversification

The 3 months correlation between Universal and CHIBA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK and Universal Entertainment 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 Universal Entertainment are associated (or correlated) with CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of Universal Entertainment i.e., Universal Entertainment and CHIBA BANK go up and down completely randomly.

Pair Corralation between Universal Entertainment and CHIBA BANK

Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the CHIBA BANK. In addition to that, Universal Entertainment is 1.65 times more volatile than CHIBA BANK. It trades about -0.09 of its total potential returns per unit of risk. CHIBA BANK is currently generating about 0.09 per unit of volatility. If you would invest  725.00  in CHIBA BANK on September 4, 2024 and sell it today you would earn a total of  85.00  from holding CHIBA BANK or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Universal Entertainment  vs.  CHIBA BANK

Universal Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CHIBA BANK

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CHIBA BANK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Universal Entertainment and CHIBA BANK

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

The idea behind Universal Entertainment and CHIBA BANK 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.