Correlation Between CEZ As and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both CEZ As 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 CEZ As and UniCredit SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and UniCredit SpA, you can compare the effects of market volatilities on CEZ As 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 CEZ As with a short position of UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and UniCredit SpA.
Diversification Opportunities for CEZ As and UniCredit SpA
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CEZ and UniCredit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA and CEZ As 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 CEZ as 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 CEZ As i.e., CEZ As and UniCredit SpA go up and down completely randomly.
Pair Corralation between CEZ As and UniCredit SpA
Assuming the 90 days trading horizon CEZ As is expected to generate 1.72 times less return on investment than UniCredit SpA. In addition to that, CEZ As is 1.18 times more volatile than UniCredit SpA. It trades about 0.14 of its total potential returns per unit of risk. UniCredit SpA is currently generating about 0.29 per unit of volatility. If you would invest 15,662 in UniCredit SpA on November 3, 2024 and sell it today you would earn a total of 3,086 from holding UniCredit SpA or generate 19.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. UniCredit SpA
Performance |
| Timeline |
| CEZ as |
| UniCredit SpA |
CEZ As and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and UniCredit SpA
The main advantage of trading using opposite CEZ As and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As 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.| CEZ As vs. Gremi Media SA | CEZ As vs. ING Bank lski | CEZ As vs. Varsav Game Studios | CEZ As vs. True Games Syndicate |
| UniCredit SpA vs. Santander Bank Polska | UniCredit SpA vs. Bank Polska Kasa | UniCredit SpA vs. ING Bank lski | UniCredit SpA vs. mBank SA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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