Correlation Between Union Technologies and Compagnie
Can any of the company-specific risk be diversified away by investing in both Union Technologies and Compagnie 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 Union Technologies and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Technologies Informatique and Compagnie de Chemins, you can compare the effects of market volatilities on Union Technologies and Compagnie 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 Union Technologies with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Technologies and Compagnie.
Diversification Opportunities for Union Technologies and Compagnie
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and Compagnie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Union Technologies Informatiqu and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins and Union Technologies 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 Union Technologies Informatique are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of Union Technologies i.e., Union Technologies and Compagnie go up and down completely randomly.
Pair Corralation between Union Technologies and Compagnie
Assuming the 90 days trading horizon Union Technologies is expected to generate 7.61 times less return on investment than Compagnie. In addition to that, Union Technologies is 2.11 times more volatile than Compagnie de Chemins. It trades about 0.02 of its total potential returns per unit of risk. Compagnie de Chemins is currently generating about 0.25 per unit of volatility. If you would invest 83,000 in Compagnie de Chemins on September 12, 2024 and sell it today you would earn a total of 7,000 from holding Compagnie de Chemins or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Union Technologies Informatiqu vs. Compagnie de Chemins
Performance |
| Timeline |
| Union Technologies |
| Compagnie de Chemins |
Union Technologies and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Technologies and Compagnie
The main advantage of trading using opposite Union Technologies and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Technologies position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Union Technologies vs. Linedata Services SA | Union Technologies vs. Lectra SA | Union Technologies vs. Manitou BF SA | Union Technologies vs. Ossiam Minimum Variance |
| Compagnie vs. Getlink SE | Compagnie vs. Compagnie du Cambodge | Compagnie vs. Manitou BF SA | Compagnie vs. Ossiam Minimum Variance |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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