Correlation Between Unibap AB and Divio Technologies

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

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

Diversification Opportunities for Unibap AB and Divio Technologies

-0.7

Correlation Coefficient

Unibap AB  Divio Technologies

Excellent diversification

The 3 months correlation between Unibap and Divio is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Unibap AB and Divio Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Divio Technologies and Unibap AB 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 Unibap AB are associated (or correlated) with Divio Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Divio Technologies has no effect on the direction of Unibap AB i.e., Unibap AB and Divio Technologies go up and down completely randomly.

Pair Corralation between Unibap AB and Divio Technologies

Assuming the 90 days trading horizon Unibap AB is expected to generate 0.54 times more return on investment than Divio Technologies. However, Unibap AB is 1.86 times less risky than Divio Technologies. It trades about 0.16 of its potential returns per unit of risk. Divio Technologies AB is currently generating about -0.04 per unit of risk. If you would invest  309.00  in Unibap AB on October 5, 2024 and sell it today you would earn a total of  101.00  from holding Unibap AB or generate 32.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Unibap AB  vs.  Divio Technologies AB

Unibap AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unibap AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Unibap AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Divio Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Divio Technologies AB 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 forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Unibap AB and Divio Technologies

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

The idea behind Unibap AB and Divio Technologies AB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.