Correlation Between METALL ZUG and Uniper SE

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

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

Diversification Opportunities for METALL ZUG and Uniper SE

0.21

Correlation Coefficient

METALL ZUG  Uniper SE

Modest diversification

The 3 months correlation between METALL and Uniper is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding METALL ZUG AG and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE and METALL ZUG 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 METALL ZUG AG 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 METALL ZUG i.e., METALL ZUG and Uniper SE go up and down completely randomly.

Pair Corralation between METALL ZUG and Uniper SE

Assuming the 90 days trading horizon METALL ZUG AG is expected to under-perform the Uniper SE. But the stock apears to be less risky and, when comparing its historical volatility, METALL ZUG AG is 1.76 times less risky than Uniper SE. The stock trades about -0.24 of its potential returns per unit of risk. The Uniper SE is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,574  in Uniper SE on October 24, 2024 and sell it today you would lose (127.00) from holding Uniper SE or give up 2.78% of portfolio value over 90 days.

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

METALL ZUG AG  vs.  Uniper SE

METALL ZUG AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METALL ZUG AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with METALL ZUG and Uniper SE

The main advantage of trading using opposite METALL ZUG and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METALL ZUG 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 METALL ZUG AG 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.