Correlation Between SYSTEMAIR and Unipol Gruppo

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

By analyzing existing cross correlation between SYSTEMAIR AB and Unipol Gruppo Finanziario, you can compare the effects of market volatilities on SYSTEMAIR and Unipol Gruppo 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 SYSTEMAIR with a short position of Unipol Gruppo. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Unipol Gruppo.

Diversification Opportunities for SYSTEMAIR and Unipol Gruppo

0.04

Correlation Coefficient

SYSTEMAIR  Unipol Gruppo

Significant diversification

The 3 months correlation between SYSTEMAIR and Unipol is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Unipol Gruppo Finanziario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipol Gruppo Finanziario and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with Unipol Gruppo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipol Gruppo Finanziario has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Unipol Gruppo go up and down completely randomly.

Pair Corralation between SYSTEMAIR and Unipol Gruppo

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the Unipol Gruppo. In addition to that, SYSTEMAIR is 1.36 times more volatile than Unipol Gruppo Finanziario. It trades about -0.14 of its total potential returns per unit of risk. Unipol Gruppo Finanziario is currently generating about 0.0 per unit of volatility. If you would invest  1,161  in Unipol Gruppo Finanziario on October 11, 2024 and sell it today you would lose (1.00) from holding Unipol Gruppo Finanziario or give up 0.09% of portfolio value over 90 days.

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

SYSTEMAIR AB  vs.  Unipol Gruppo Finanziario

SYSTEMAIR AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SYSTEMAIR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Unipol Gruppo Finanziario

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unipol Gruppo Finanziario are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Unipol Gruppo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SYSTEMAIR and Unipol Gruppo

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

The idea behind SYSTEMAIR AB and Unipol Gruppo Finanziario 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.