Correlation Between Uniper SE and Summit Materials

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

By analyzing existing cross correlation between Uniper SE and Summit Materials Cl, you can compare the effects of market volatilities on Uniper SE and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and Summit Materials.

Diversification Opportunities for Uniper SE and Summit Materials

-0.82

Correlation Coefficient

Uniper SE  Summit Materials

Pay attention - limited upside

The 3 months correlation between Uniper and Summit is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Uniper SE i.e., Uniper SE and Summit Materials go up and down completely randomly.

Pair Corralation between Uniper SE and Summit Materials

Assuming the 90 days trading horizon Uniper SE is expected to under-perform the Summit Materials. In addition to that, Uniper SE is 1.42 times more volatile than Summit Materials Cl. It trades about -0.07 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.07 per unit of volatility. If you would invest  3,510  in Summit Materials Cl on September 23, 2024 and sell it today you would earn a total of  1,540  from holding Summit Materials Cl or generate 43.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.27%
Values	Daily Returns

Uniper SE  vs.  Summit Materials Cl

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Summit Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uniper SE and Summit Materials

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

The idea behind Uniper SE and Summit Materials Cl 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.