Correlation Between Vale SA and Unicaja Banco

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

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

Diversification Opportunities for Vale SA and Unicaja Banco

-0.71

Correlation Coefficient

Vale SA  Unicaja Banco

Pay attention - limited upside

The 3 months correlation between Vale and Unicaja is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Unicaja Banco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicaja Banco SA and Vale SA 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 Vale SA are associated (or correlated) with Unicaja Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicaja Banco SA has no effect on the direction of Vale SA i.e., Vale SA and Unicaja Banco go up and down completely randomly.

Pair Corralation between Vale SA and Unicaja Banco

Assuming the 90 days trading horizon Vale SA is expected to under-perform the Unicaja Banco. In addition to that, Vale SA is 1.25 times more volatile than Unicaja Banco SA. It trades about -0.02 of its total potential returns per unit of risk. Unicaja Banco SA is currently generating about 0.1 per unit of volatility. If you would invest  117.00  in Unicaja Banco SA on September 13, 2024 and sell it today you would earn a total of  13.00  from holding Unicaja Banco SA or generate 11.11% return on investment over 90 days.

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

Vale SA  vs.  Unicaja Banco SA

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Vale SA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Unicaja Banco SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unicaja Banco SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Unicaja Banco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vale SA and Unicaja Banco

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

The idea behind Vale SA and Unicaja Banco SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.