Correlation Between CN MODERN and UniCredit SpA

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

By analyzing existing cross correlation between CN MODERN DAIRY and UniCredit SpA, you can compare the effects of market volatilities on CN MODERN and UniCredit SpA 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 CN MODERN with a short position of UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and UniCredit SpA.

Diversification Opportunities for CN MODERN and UniCredit SpA

-0.16

Correlation Coefficient

CN MODERN  UniCredit SpA

Good diversification

The 3 months correlation between 07M and UniCredit is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of CN MODERN i.e., CN MODERN and UniCredit SpA go up and down completely randomly.

Pair Corralation between CN MODERN and UniCredit SpA

Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 4.19 times more return on investment than UniCredit SpA. However, CN MODERN is 4.19 times more volatile than UniCredit SpA. It trades about 0.06 of its potential returns per unit of risk. UniCredit SpA is currently generating about 0.07 per unit of risk. If you would invest  9.60  in CN MODERN DAIRY on October 10, 2024 and sell it today you would earn a total of  0.35  from holding CN MODERN DAIRY or generate 3.65% return on investment over 90 days.

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

CN MODERN DAIRY  vs.  UniCredit SpA

CN MODERN DAIRY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, CN MODERN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

UniCredit SpA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, UniCredit SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CN MODERN and UniCredit SpA

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

The idea behind CN MODERN DAIRY and UniCredit SpA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.