Correlation Between UST Inc and Multi Units

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

By analyzing existing cross correlation between Multi Units Luxembourg and Multi Units France, you can compare the effects of market volatilities on UST Inc and Multi Units 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 UST Inc with a short position of Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of UST Inc and Multi Units.

Diversification Opportunities for UST Inc and Multi Units

-0.16

Correlation Coefficient

UST Inc  Multi Units

Good diversification

The 3 months correlation between UST and Multi is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units Luxembourg and Multi Units France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units France and UST Inc 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 Multi Units Luxembourg are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units France has no effect on the direction of UST Inc i.e., UST Inc and Multi Units go up and down completely randomly.

Pair Corralation between UST Inc and Multi Units

Assuming the 90 days trading horizon Multi Units Luxembourg is expected to generate 0.81 times more return on investment than Multi Units. However, Multi Units Luxembourg is 1.24 times less risky than Multi Units. It trades about 0.11 of its potential returns per unit of risk. Multi Units France is currently generating about -0.05 per unit of risk. If you would invest  5,630  in Multi Units Luxembourg on September 12, 2024 and sell it today you would earn a total of  2,619  from holding Multi Units Luxembourg or generate 46.52% return on investment over 90 days.

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

Multi Units Luxembourg   vs.  Multi Units France

Multi Units Luxembourg

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Units Luxembourg are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UST Inc sustained solid returns over the last few months and may actually be approaching a breakup point.

Multi Units France

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with UST Inc and Multi Units

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

The idea behind Multi Units Luxembourg and Multi Units France 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.