Correlation Between Ubiquitech Software and THC Therapeutics

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

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

Diversification Opportunities for Ubiquitech Software and THC Therapeutics

-0.14

Correlation Coefficient

Ubiquitech Software  THC Therapeutics

Good diversification

The 3 months correlation between Ubiquitech and THC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquitech Software and THC Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THC Therapeutics and Ubiquitech Software 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 Ubiquitech Software are associated (or correlated) with THC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THC Therapeutics has no effect on the direction of Ubiquitech Software i.e., Ubiquitech Software and THC Therapeutics go up and down completely randomly.

Pair Corralation between Ubiquitech Software and THC Therapeutics

Given the investment horizon of 90 days Ubiquitech Software is expected to generate 2.97 times more return on investment than THC Therapeutics. However, Ubiquitech Software is 2.97 times more volatile than THC Therapeutics. It trades about 0.28 of its potential returns per unit of risk. THC Therapeutics is currently generating about 0.1 per unit of risk. If you would invest  0.01  in Ubiquitech Software on September 4, 2024 and sell it today you would lose (0.01) from holding Ubiquitech Software or give up 100.0% of portfolio value over 90 days.

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

Ubiquitech Software  vs.  THC Therapeutics

Ubiquitech Software

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquitech Software are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ubiquitech Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

THC Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THC Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, THC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubiquitech Software and THC Therapeutics

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

The idea behind Ubiquitech Software and THC Therapeutics 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.