Correlation Between Bank Ochrony and UniCredit SpA

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Can any of the company-specific risk be diversified away by investing in both Bank Ochrony and UniCredit SpA 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 Bank Ochrony and UniCredit SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Ochrony rodowiska and UniCredit SpA, you can compare the effects of market volatilities on Bank Ochrony and UniCredit SpA 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 Bank Ochrony with a short position of UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ochrony and UniCredit SpA.

Diversification Opportunities for Bank Ochrony and UniCredit SpA

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bank and UniCredit is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ochrony rodowiska and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and Bank Ochrony 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 Bank Ochrony rodowiska are associated (or correlated) with UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Bank Ochrony i.e., Bank Ochrony and UniCredit SpA go up and down completely randomly.

Pair Corralation between Bank Ochrony and UniCredit SpA

Assuming the 90 days trading horizon Bank Ochrony rodowiska is expected to under-perform the UniCredit SpA. But the stock apears to be less risky and, when comparing its historical volatility, Bank Ochrony rodowiska is 1.06 times less risky than UniCredit SpA. The stock trades about -0.1 of its potential returns per unit of risk. The UniCredit SpA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  15,021  in UniCredit SpA on August 24, 2024 and sell it today you would earn a total of  2,139  from holding UniCredit SpA or generate 14.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.4%
ValuesDaily Returns

Bank Ochrony rodowiska  vs.  UniCredit SpA

 Performance 
       Timeline  
Bank Ochrony rodowiska 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank Ochrony rodowiska has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
UniCredit SpA 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, UniCredit SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Bank Ochrony and UniCredit SpA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Ochrony and UniCredit SpA

The main advantage of trading using opposite Bank Ochrony and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Ochrony position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.
The idea behind Bank Ochrony rodowiska and UniCredit SpA 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.
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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