Correlation Between Uzinexport and Societatea Nationala

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

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

Diversification Opportunities for Uzinexport and Societatea Nationala

0.54

Correlation Coefficient

Uzinexport  Societatea Nationala

Very weak diversification

The 3 months correlation between Uzinexport and Societatea is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Uzinexport SA and Societatea Nationala de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societatea Nationala and Uzinexport 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 Uzinexport SA are associated (or correlated) with Societatea Nationala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societatea Nationala has no effect on the direction of Uzinexport i.e., Uzinexport and Societatea Nationala go up and down completely randomly.

Pair Corralation between Uzinexport and Societatea Nationala

Assuming the 90 days trading horizon Uzinexport SA is expected to generate 6.07 times more return on investment than Societatea Nationala. However, Uzinexport is 6.07 times more volatile than Societatea Nationala de. It trades about 0.04 of its potential returns per unit of risk. Societatea Nationala de is currently generating about 0.19 per unit of risk. If you would invest  50.00  in Uzinexport SA on December 25, 2024 and sell it today you would earn a total of  2.00  from holding Uzinexport SA or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Uzinexport SA  vs.  Societatea Nationala de

Uzinexport SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uzinexport SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Uzinexport displayed solid returns over the last few months and may actually be approaching a breakup point.

Societatea Nationala

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Societatea Nationala de are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Societatea Nationala displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uzinexport and Societatea Nationala

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

The idea behind Uzinexport SA and Societatea Nationala de 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.