Correlation Between Unifique Telecomunicaes and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Unifique Telecomunicaes and Electronic Arts 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 Unifique Telecomunicaes and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unifique Telecomunicaes SA and Electronic Arts, you can compare the effects of market volatilities on Unifique Telecomunicaes and Electronic Arts 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 Unifique Telecomunicaes with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unifique Telecomunicaes and Electronic Arts.
Diversification Opportunities for Unifique Telecomunicaes and Electronic Arts
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Unifique and Electronic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Unifique Telecomunicaes SA and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Unifique Telecomunicaes 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 Unifique Telecomunicaes SA are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Unifique Telecomunicaes i.e., Unifique Telecomunicaes and Electronic Arts go up and down completely randomly.
Pair Corralation between Unifique Telecomunicaes and Electronic Arts
Assuming the 90 days trading horizon Unifique Telecomunicaes is expected to generate 1.81 times less return on investment than Electronic Arts. In addition to that, Unifique Telecomunicaes is 1.37 times more volatile than Electronic Arts. It trades about 0.02 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.06 per unit of volatility. If you would invest 33,325 in Electronic Arts on August 27, 2024 and sell it today you would earn a total of 15,219 from holding Electronic Arts or generate 45.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Unifique Telecomunicaes SA vs. Electronic Arts
Performance |
| Timeline |
| Unifique Telecomunicaes |
| Electronic Arts |
Unifique Telecomunicaes and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unifique Telecomunicaes and Electronic Arts
The main advantage of trading using opposite Unifique Telecomunicaes and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unifique Telecomunicaes position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.The idea behind Unifique Telecomunicaes SA and Electronic Arts 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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