Correlation Between UniCredit SpA and SUNEX SA

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

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

Diversification Opportunities for UniCredit SpA and SUNEX SA

-0.04

Correlation Coefficient

UniCredit SpA  SUNEX SA

Good diversification

The 3 months correlation between UniCredit and SUNEX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA and SUNEX SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNEX SA 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 SUNEX SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNEX SA has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and SUNEX SA go up and down completely randomly.

Pair Corralation between UniCredit SpA and SUNEX SA

Assuming the 90 days trading horizon UniCredit SpA is expected to generate 0.55 times more return on investment than SUNEX SA. However, UniCredit SpA is 1.82 times less risky than SUNEX SA. It trades about 0.3 of its potential returns per unit of risk. SUNEX SA is currently generating about 0.1 per unit of risk. If you would invest  16,100  in UniCredit SpA on December 22, 2024 and sell it today you would earn a total of  6,370  from holding UniCredit SpA or generate 39.57% return on investment over 90 days.

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

UniCredit SpA  vs.  SUNEX 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 23 (%) 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.

SUNEX SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUNEX SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, SUNEX SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UniCredit SpA and SUNEX SA

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

The idea behind UniCredit SpA and SUNEX 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .