Correlation Between Tata Steel and Uniper SE

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

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

Diversification Opportunities for Tata Steel and Uniper SE

0.2

Correlation Coefficient

Tata Steel  Uniper SE

Modest diversification

The 3 months correlation between Tata and Uniper is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tata Steel Limited and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE and Tata Steel 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 Tata Steel Limited 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 Tata Steel i.e., Tata Steel and Uniper SE go up and down completely randomly.

Pair Corralation between Tata Steel and Uniper SE

Assuming the 90 days trading horizon Tata Steel Limited is expected to generate 0.65 times more return on investment than Uniper SE. However, Tata Steel Limited is 1.53 times less risky than Uniper SE. It trades about 0.02 of its potential returns per unit of risk. Uniper SE is currently generating about 0.0 per unit of risk. If you would invest  1,405  in Tata Steel Limited on October 10, 2024 and sell it today you would earn a total of  130.00  from holding Tata Steel Limited or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Tata Steel Limited  vs.  Uniper SE

Tata Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 latest conflicting 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.

Pair Trading with Tata Steel and Uniper SE

The main advantage of trading using opposite Tata Steel and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tata Steel 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 Tata Steel Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.