Correlation Between Electromagnetica and Unisem SA

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

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

Diversification Opportunities for Electromagnetica and Unisem SA

-0.37

Correlation Coefficient

Electromagnetica  Unisem SA

Very good diversification

The 3 months correlation between Electromagnetica and Unisem is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Electromagnetica SA and Unisem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisem SA and Electromagnetica 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 Electromagnetica SA are associated (or correlated) with Unisem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisem SA has no effect on the direction of Electromagnetica i.e., Electromagnetica and Unisem SA go up and down completely randomly.

Pair Corralation between Electromagnetica and Unisem SA

Assuming the 90 days trading horizon Electromagnetica is expected to generate 2.46 times less return on investment than Unisem SA. In addition to that, Electromagnetica is 1.05 times more volatile than Unisem SA. It trades about 0.06 of its total potential returns per unit of risk. Unisem SA is currently generating about 0.15 per unit of volatility. If you would invest  32.00  in Unisem SA on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Unisem SA or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Electromagnetica SA  vs.  Unisem SA

Electromagnetica

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electromagnetica SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Electromagnetica displayed solid returns over the last few months and may actually be approaching a breakup point.

Unisem SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unisem SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Unisem SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electromagnetica and Unisem SA

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

The idea behind Electromagnetica SA and Unisem SA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.