Correlation Between Unibios Holdings and Foodlink
Can any of the company-specific risk be diversified away by investing in both Unibios Holdings and Foodlink 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 Unibios Holdings and Foodlink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unibios Holdings SA and Foodlink AE, you can compare the effects of market volatilities on Unibios Holdings and Foodlink 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 Unibios Holdings with a short position of Foodlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unibios Holdings and Foodlink.
Diversification Opportunities for Unibios Holdings and Foodlink
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Unibios and Foodlink is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Unibios Holdings SA and Foodlink AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodlink AE and Unibios Holdings 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 Unibios Holdings SA are associated (or correlated) with Foodlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodlink AE has no effect on the direction of Unibios Holdings i.e., Unibios Holdings and Foodlink go up and down completely randomly.
Pair Corralation between Unibios Holdings and Foodlink
Assuming the 90 days trading horizon Unibios Holdings SA is expected to under-perform the Foodlink. But the stock apears to be less risky and, when comparing its historical volatility, Unibios Holdings SA is 1.27 times less risky than Foodlink. The stock trades about -0.11 of its potential returns per unit of risk. The Foodlink AE is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Foodlink AE on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Foodlink AE or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unibios Holdings SA vs. Foodlink AE
Performance |
| Timeline |
| Unibios Holdings |
| Foodlink AE |
Unibios Holdings and Foodlink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unibios Holdings and Foodlink
The main advantage of trading using opposite Unibios Holdings and Foodlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unibios Holdings position performs unexpectedly, Foodlink 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 Foodlink will offset losses from the drop in Foodlink's long position.The idea behind Unibios Holdings SA and Foodlink AE 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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