Correlation Between Semperit Aktiengesellscha and UBM Development

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

By analyzing existing cross correlation between Semperit Aktiengesellschaft Holding and UBM Development AG, you can compare the effects of market volatilities on Semperit Aktiengesellscha and UBM Development 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 Semperit Aktiengesellscha with a short position of UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semperit Aktiengesellscha and UBM Development.

Diversification Opportunities for Semperit Aktiengesellscha and UBM Development

0.73

Correlation Coefficient

Semperit Aktiengesellscha  UBM Development

Poor diversification

The 3 months correlation between Semperit and UBM is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Semperit Aktiengesellschaft Ho and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development AG and Semperit Aktiengesellscha 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 Semperit Aktiengesellschaft Holding are associated (or correlated) with UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of Semperit Aktiengesellscha i.e., Semperit Aktiengesellscha and UBM Development go up and down completely randomly.

Pair Corralation between Semperit Aktiengesellscha and UBM Development

Assuming the 90 days trading horizon Semperit Aktiengesellscha is expected to generate 1.11 times less return on investment than UBM Development. But when comparing it to its historical volatility, Semperit Aktiengesellschaft Holding is 1.37 times less risky than UBM Development. It trades about 0.26 of its potential returns per unit of risk. UBM Development AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,650  in UBM Development AG on December 27, 2024 and sell it today you would earn a total of  490.00  from holding UBM Development AG or generate 29.7% return on investment over 90 days.

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

Semperit Aktiengesellschaft Ho  vs.  UBM Development AG

Semperit Aktiengesellscha

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semperit Aktiengesellschaft Holding are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent primary indicators, Semperit Aktiengesellscha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

UBM Development AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBM Development AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, UBM Development demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semperit Aktiengesellscha and UBM Development

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

The idea behind Semperit Aktiengesellschaft Holding and UBM Development AG 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..