Correlation Between Unipol Gruppo and Gemfields Group

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

By analyzing existing cross correlation between Unipol Gruppo Finanziario and Gemfields Group Limited, you can compare the effects of market volatilities on Unipol Gruppo and Gemfields Group 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 Unipol Gruppo with a short position of Gemfields Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unipol Gruppo and Gemfields Group.

Diversification Opportunities for Unipol Gruppo and Gemfields Group

-0.37

Correlation Coefficient

Unipol Gruppo  Gemfields Group

Very good diversification

The 3 months correlation between Unipol and Gemfields is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Unipol Gruppo Finanziario and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group and Unipol Gruppo 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 Unipol Gruppo Finanziario are associated (or correlated) with Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Unipol Gruppo i.e., Unipol Gruppo and Gemfields Group go up and down completely randomly.

Pair Corralation between Unipol Gruppo and Gemfields Group

Assuming the 90 days trading horizon Unipol Gruppo Finanziario is expected to generate 0.4 times more return on investment than Gemfields Group. However, Unipol Gruppo Finanziario is 2.52 times less risky than Gemfields Group. It trades about 0.12 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.01 per unit of risk. If you would invest  412.00  in Unipol Gruppo Finanziario on October 3, 2024 and sell it today you would earn a total of  767.00  from holding Unipol Gruppo Finanziario or generate 186.17% return on investment over 90 days.

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

Unipol Gruppo Finanziario  vs.  Gemfields Group Limited

Unipol Gruppo Finanziario

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unipol Gruppo Finanziario are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Unipol Gruppo reported solid returns over the last few months and may actually be approaching a breakup point.

Gemfields Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemfields Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Unipol Gruppo and Gemfields Group

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

The idea behind Unipol Gruppo Finanziario and Gemfields Group Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.