Correlation Between Unifique Telecomunicaes and Honda

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

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

Diversification Opportunities for Unifique Telecomunicaes and Honda

0.27

Correlation Coefficient

Unifique Telecomunicaes  Honda

Modest diversification

The 3 months correlation between Unifique and Honda is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Unifique Telecomunicaes SA and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor and Unifique Telecomunicaes 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 Unifique Telecomunicaes SA are associated (or correlated) with Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Unifique Telecomunicaes i.e., Unifique Telecomunicaes and Honda go up and down completely randomly.

Pair Corralation between Unifique Telecomunicaes and Honda

Assuming the 90 days trading horizon Unifique Telecomunicaes SA is expected to under-perform the Honda. In addition to that, Unifique Telecomunicaes is 1.16 times more volatile than Honda Motor Co. It trades about -0.2 of its total potential returns per unit of risk. Honda Motor Co is currently generating about 0.01 per unit of volatility. If you would invest  15,345  in Honda Motor Co on September 17, 2024 and sell it today you would earn a total of  15.00  from holding Honda Motor Co or generate 0.1% return on investment over 90 days.

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

Unifique Telecomunicaes SA  vs.  Honda Motor Co

Unifique Telecomunicaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifique Telecomunicaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Honda Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Honda Motor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Unifique Telecomunicaes and Honda

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

The idea behind Unifique Telecomunicaes SA and Honda Motor Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.