Correlation Between Gapwaves and Unibap AB

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

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

Diversification Opportunities for Gapwaves and Unibap AB

-0.46

Correlation Coefficient

Gapwaves  Unibap AB

Very good diversification

The 3 months correlation between Gapwaves and Unibap is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gapwaves AB Series and Unibap AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unibap AB and Gapwaves 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 Gapwaves AB Series are associated (or correlated) with Unibap AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unibap AB has no effect on the direction of Gapwaves i.e., Gapwaves and Unibap AB go up and down completely randomly.

Pair Corralation between Gapwaves and Unibap AB

Assuming the 90 days trading horizon Gapwaves AB Series is expected to under-perform the Unibap AB. In addition to that, Gapwaves is 1.52 times more volatile than Unibap AB. It trades about -0.02 of its total potential returns per unit of risk. Unibap AB is currently generating about 0.16 per unit of volatility. If you would invest  399.00  in Unibap AB on November 29, 2024 and sell it today you would earn a total of  96.00  from holding Unibap AB or generate 24.06% return on investment over 90 days.

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

Gapwaves AB Series  vs.  Unibap AB

Gapwaves AB Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gapwaves AB Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gapwaves is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Unibap AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unibap AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Unibap AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gapwaves and Unibap AB

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

The idea behind Gapwaves AB Series and Unibap AB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..