Correlation Between UniCredit SpA and Creotech Instruments

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

By analyzing existing cross correlation between UniCredit SpA and Creotech Instruments SA, you can compare the effects of market volatilities on UniCredit SpA and Creotech Instruments 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 UniCredit SpA with a short position of Creotech Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and Creotech Instruments.

Diversification Opportunities for UniCredit SpA and Creotech Instruments

0.82

Correlation Coefficient

UniCredit SpA  Creotech Instruments

Very poor diversification

The 3 months correlation between UniCredit and Creotech is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and Creotech Instruments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creotech Instruments and UniCredit SpA 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 UniCredit SpA are associated (or correlated) with Creotech Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creotech Instruments has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Creotech Instruments go up and down completely randomly.

Pair Corralation between UniCredit SpA and Creotech Instruments

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 1.01 times more return on investment than Creotech Instruments. However, UniCredit SpA is 1.01 times more volatile than Creotech Instruments SA. It trades about 0.36 of its potential returns per unit of risk. Creotech Instruments SA is currently generating about 0.18 per unit of risk. If you would invest  18,586  in UniCredit SpA on December 3, 2024 and sell it today you would earn a total of  3,089  from holding UniCredit SpA or generate 16.62% return on investment over 90 days.

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

UniCredit SpA  vs.  Creotech Instruments SA

UniCredit SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, UniCredit SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Creotech Instruments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Creotech Instruments SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Creotech Instruments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UniCredit SpA and Creotech Instruments

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

The idea behind UniCredit SpA and Creotech Instruments SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.