Correlation Between Uniper SE and London Stock
Can any of the company-specific risk be diversified away by investing in both Uniper SE and London Stock 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 Uniper SE and London Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniper SE and London Stock Exchange, you can compare the effects of market volatilities on Uniper SE and London Stock 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 Uniper SE with a short position of London Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and London Stock.
Diversification Opportunities for Uniper SE and London Stock
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Uniper and London is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and London Stock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Stock Exchange and Uniper SE 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 Uniper SE are associated (or correlated) with London Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Stock Exchange has no effect on the direction of Uniper SE i.e., Uniper SE and London Stock go up and down completely randomly.
Pair Corralation between Uniper SE and London Stock
Assuming the 90 days trading horizon Uniper SE is expected to under-perform the London Stock. In addition to that, Uniper SE is 2.36 times more volatile than London Stock Exchange. It trades about -0.23 of its total potential returns per unit of risk. London Stock Exchange is currently generating about 0.23 per unit of volatility. If you would invest 1,026,000 in London Stock Exchange on August 27, 2024 and sell it today you would earn a total of 98,500 from holding London Stock Exchange or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniper SE vs. London Stock Exchange
Performance |
| Timeline |
| Uniper SE |
| London Stock Exchange |
Uniper SE and London Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniper SE and London Stock
The main advantage of trading using opposite Uniper SE and London Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE position performs unexpectedly, London Stock 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 London Stock will offset losses from the drop in London Stock's long position.| Uniper SE vs. Samsung Electronics Co | Uniper SE vs. Samsung Electronics Co | Uniper SE vs. Hyundai Motor | Uniper SE vs. Toyota Motor Corp |
| London Stock vs. Uniper SE | London Stock vs. Mulberry Group PLC | London Stock vs. London Security Plc | London Stock vs. Triad Group PLC |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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