Correlation Between Unipar Carbocloro and Novartis

Can any of the company-specific risk be diversified away by investing in both Unipar Carbocloro and Novartis 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 Novartis 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 Novartis AG, you can compare the effects of market volatilities on Unipar Carbocloro and Novartis 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 Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unipar Carbocloro and Novartis.

Diversification Opportunities for Unipar Carbocloro and Novartis

-0.45

Correlation Coefficient

Unipar Carbocloro  Novartis

Very good diversification

The 3 months correlation between Unipar and Novartis is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Unipar Carbocloro SA and Novartis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG 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 Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG has no effect on the direction of Unipar Carbocloro i.e., Unipar Carbocloro and Novartis go up and down completely randomly.

Pair Corralation between Unipar Carbocloro and Novartis

Assuming the 90 days trading horizon Unipar Carbocloro SA is expected to generate 1.19 times more return on investment than Novartis. However, Unipar Carbocloro is 1.19 times more volatile than Novartis AG. It trades about 0.06 of its potential returns per unit of risk. Novartis AG is currently generating about -0.06 per unit of risk. If you would invest  4,523  in Unipar Carbocloro SA on September 13, 2024 and sell it today you would earn a total of  289.00  from holding Unipar Carbocloro SA or generate 6.39% return on investment over 90 days.

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

Unipar Carbocloro SA  vs.  Novartis AG

Unipar Carbocloro

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Novartis AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novartis AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Unipar Carbocloro and Novartis

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

The idea behind Unipar Carbocloro SA and Novartis AG 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.