Correlation Between LBG Media and Uniper SE

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

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

Diversification Opportunities for LBG Media and Uniper SE

0.27

Correlation Coefficient

LBG Media  Uniper SE

Modest diversification

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

Pair Corralation between LBG Media and Uniper SE

Assuming the 90 days trading horizon LBG Media PLC is expected to generate 1.47 times more return on investment than Uniper SE. However, LBG Media is 1.47 times more volatile than Uniper SE. It trades about 0.21 of its potential returns per unit of risk. Uniper SE is currently generating about -0.06 per unit of risk. If you would invest  12,150  in LBG Media PLC on October 5, 2024 and sell it today you would earn a total of  1,250  from holding LBG Media PLC or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

LBG Media PLC  vs.  Uniper SE

LBG Media PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LBG Media PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, LBG Media is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uniper SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LBG Media and Uniper SE

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

The idea behind LBG Media PLC and Uniper SE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .