Correlation Between Ubisoft Entertainment and IA FINANCIAL

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

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

Diversification Opportunities for Ubisoft Entertainment and IA FINANCIAL

0.06

Correlation Coefficient

Ubisoft Entertainment  IA FINANCIAL

Significant diversification

The 3 months correlation between Ubisoft and 1OD is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment SA and IA FINANCIAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA FINANCIAL P and Ubisoft 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 Ubisoft Entertainment SA are associated (or correlated) with IA FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA FINANCIAL P has no effect on the direction of Ubisoft Entertainment i.e., Ubisoft Entertainment and IA FINANCIAL go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and IA FINANCIAL

Assuming the 90 days horizon Ubisoft Entertainment SA is expected to generate 2.04 times more return on investment than IA FINANCIAL. However, Ubisoft Entertainment is 2.04 times more volatile than IA FINANCIAL P. It trades about 0.08 of its potential returns per unit of risk. IA FINANCIAL P is currently generating about 0.14 per unit of risk. If you would invest  1,065  in Ubisoft Entertainment SA on September 27, 2024 and sell it today you would earn a total of  185.00  from holding Ubisoft Entertainment SA or generate 17.37% return on investment over 90 days.

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

Ubisoft Entertainment SA  vs.  IA FINANCIAL P

Ubisoft Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ubisoft Entertainment SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ubisoft Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

IA FINANCIAL P

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IA FINANCIAL P are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IA FINANCIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubisoft Entertainment and IA FINANCIAL

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

The idea behind Ubisoft Entertainment SA and IA FINANCIAL P 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.