Correlation Between Ubisoft Entertainment and Shimano

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

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

Diversification Opportunities for Ubisoft Entertainment and Shimano

0.06

Correlation Coefficient

Ubisoft Entertainment  Shimano

Significant diversification

The 3 months correlation between Ubisoft and Shimano is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment SA and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano and Ubisoft Entertainment 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 Ubisoft Entertainment SA are associated (or correlated) with Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of Ubisoft Entertainment i.e., Ubisoft Entertainment and Shimano go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and Shimano

Assuming the 90 days horizon Ubisoft Entertainment SA is expected to generate 1.92 times more return on investment than Shimano. However, Ubisoft Entertainment is 1.92 times more volatile than Shimano. It trades about 0.07 of its potential returns per unit of risk. Shimano is currently generating about 0.04 per unit of risk. If you would invest  1,250  in Ubisoft Entertainment SA on December 21, 2024 and sell it today you would earn a total of  134.00  from holding Ubisoft Entertainment SA or generate 10.72% return on investment over 90 days.

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

Ubisoft Entertainment SA  vs.  Shimano

Ubisoft Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ubisoft Entertainment SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ubisoft Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Shimano

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shimano are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shimano is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ubisoft Entertainment and Shimano

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

The idea behind Ubisoft Entertainment SA and Shimano 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.