Correlation Between Uniper SE and Cars

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

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

Diversification Opportunities for Uniper SE and Cars

0.08

Correlation Coefficient

Uniper SE  Cars

Significant diversification

The 3 months correlation between Uniper and Cars is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Uniper SE 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 Uniper SE are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Uniper SE i.e., Uniper SE and Cars go up and down completely randomly.

Pair Corralation between Uniper SE and Cars

Assuming the 90 days trading horizon Uniper SE is expected to generate 8.43 times less return on investment than Cars. In addition to that, Uniper SE is 1.12 times more volatile than Cars Inc. It trades about 0.0 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.04 per unit of volatility. If you would invest  1,444  in Cars Inc on September 26, 2024 and sell it today you would earn a total of  266.00  from holding Cars Inc or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.39%
Values	Daily Returns

Uniper SE  vs.  Cars Inc

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cars Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cars Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cars may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Uniper SE and Cars

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

The idea behind Uniper SE and Cars Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.