Correlation Between E Shopping and UniCredit SpA

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

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

Diversification Opportunities for E Shopping and UniCredit SpA

0.14

Correlation Coefficient

E Shopping  UniCredit SpA

Average diversification

The 3 months correlation between ESG and UniCredit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding E shopping Group SA and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and E Shopping 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 E shopping Group SA are associated (or correlated) with UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of E Shopping i.e., E Shopping and UniCredit SpA go up and down completely randomly.

Pair Corralation between E Shopping and UniCredit SpA

Assuming the 90 days trading horizon E shopping Group SA is expected to under-perform the UniCredit SpA. In addition to that, E Shopping is 3.55 times more volatile than UniCredit SpA. It trades about -0.2 of its total potential returns per unit of risk. UniCredit SpA is currently generating about -0.09 per unit of volatility. If you would invest  17,262  in UniCredit SpA on September 22, 2024 and sell it today you would lose (1,386) from holding UniCredit SpA or give up 8.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.74%
Values	Daily Returns

E shopping Group SA  vs.  UniCredit SpA

E shopping Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E shopping Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

UniCredit SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, UniCredit SpA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with E Shopping and UniCredit SpA

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

The idea behind E shopping Group SA and UniCredit SpA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.