Correlation Between Galp Energa and Unit
Can any of the company-specific risk be diversified away by investing in both Galp Energa and Unit 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 Galp Energa and Unit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galp Energa and Unit Corporation, you can compare the effects of market volatilities on Galp Energa and Unit 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 Galp Energa with a short position of Unit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galp Energa and Unit.
Diversification Opportunities for Galp Energa and Unit
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Galp and Unit is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Galp Energa and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit and Galp Energa 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 Galp Energa are associated (or correlated) with Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of Galp Energa i.e., Galp Energa and Unit go up and down completely randomly.
Pair Corralation between Galp Energa and Unit
Assuming the 90 days horizon Galp Energa is expected to under-perform the Unit. But the pink sheet apears to be less risky and, when comparing its historical volatility, Galp Energa is 1.88 times less risky than Unit. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Unit Corporation is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,058 in Unit Corporation on August 28, 2024 and sell it today you would lose (86.00) from holding Unit Corporation or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galp Energa vs. Unit Corp.
Performance |
| Timeline |
| Galp Energa |
| Unit |
Galp Energa and Unit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galp Energa and Unit
The main advantage of trading using opposite Galp Energa and Unit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galp Energa position performs unexpectedly, Unit 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 Unit will offset losses from the drop in Unit's long position.| Galp Energa vs. Shell PLC ADR | Galp Energa vs. Equinor ASA ADR | Galp Energa vs. BP PLC ADR | Galp Energa vs. Eni SpA ADR |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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