Correlation Between Unipar Carbocloro and CVS Health

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

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

Diversification Opportunities for Unipar Carbocloro and CVS Health

0.53

Correlation Coefficient

Unipar Carbocloro  CVS Health

Very weak diversification

The 3 months correlation between Unipar and CVS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Unipar Carbocloro SA and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Unipar Carbocloro 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 Unipar Carbocloro SA are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Unipar Carbocloro i.e., Unipar Carbocloro and CVS Health go up and down completely randomly.

Pair Corralation between Unipar Carbocloro and CVS Health

Assuming the 90 days trading horizon Unipar Carbocloro is expected to generate 2.81 times less return on investment than CVS Health. But when comparing it to its historical volatility, Unipar Carbocloro SA is 1.41 times less risky than CVS Health. It trades about 0.12 of its potential returns per unit of risk. CVS Health is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,662  in CVS Health on December 28, 2024 and sell it today you would earn a total of  1,234  from holding CVS Health or generate 46.36% return on investment over 90 days.

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

Unipar Carbocloro SA  vs.  CVS Health

Unipar Carbocloro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro unveiled solid returns over the last few months and may actually be approaching a breakup point.

CVS Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CVS Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unipar Carbocloro and CVS Health

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

The idea behind Unipar Carbocloro SA and CVS Health 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.