Correlation Between Uniper SE and Vodafone Group

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

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

Diversification Opportunities for Uniper SE and Vodafone Group

0.82

Correlation Coefficient

Uniper SE  Vodafone Group

Very poor diversification

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

Pair Corralation between Uniper SE and Vodafone Group

Assuming the 90 days trading horizon Uniper SE is expected to generate 1.76 times more return on investment than Vodafone Group. However, Uniper SE is 1.76 times more volatile than Vodafone Group PLC. It trades about -0.02 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.08 per unit of risk. If you would invest  4,127  in Uniper SE on October 3, 2024 and sell it today you would lose (250.00) from holding Uniper SE or give up 6.06% of portfolio value over 90 days.

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

Uniper SE  vs.  Vodafone Group PLC

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 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.

Vodafone Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Uniper SE and Vodafone Group

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

The idea behind Uniper SE and Vodafone Group PLC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.