Correlation Between CVR Energy and Uniper SE

Can any of the company-specific risk be diversified away by investing in both CVR Energy and Uniper SE 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 CVR Energy and Uniper SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CVR Energy and Uniper SE

0.64

Correlation Coefficient

CVR Energy  Uniper SE

Poor diversification

The 3 months correlation between CVR and Uniper is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE and CVR Energy 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 CVR Energy are associated (or correlated) with Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of CVR Energy i.e., CVR Energy and Uniper SE go up and down completely randomly.

Pair Corralation between CVR Energy and Uniper SE

Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Uniper SE. In addition to that, CVR Energy is 1.84 times more volatile than Uniper SE. It trades about -0.05 of its total potential returns per unit of risk. Uniper SE is currently generating about 0.03 per unit of volatility. If you would invest  4,418  in Uniper SE on December 1, 2024 and sell it today you would earn a total of  35.00  from holding Uniper SE or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

CVR Energy  vs.  Uniper SE

CVR Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVR Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Uniper SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uniper SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Uniper SE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CVR Energy and Uniper SE

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

The idea behind CVR Energy and Uniper SE 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.