Correlation Between OVERSEA CHINUNSPADR/2 and UNICREDIT SPA
Can any of the company-specific risk be diversified away by investing in both OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 and UNICREDIT SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OVERSEA CHINUNSPADR2 and UNICREDIT SPA ADR, you can compare the effects of market volatilities on OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 with a short position of UNICREDIT SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of OVERSEA CHINUNSPADR/2 and UNICREDIT SPA.
Diversification Opportunities for OVERSEA CHINUNSPADR/2 and UNICREDIT SPA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between OVERSEA and UNICREDIT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding OVERSEA CHINUNSPADR2 and UNICREDIT SPA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNICREDIT SPA ADR and OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR2 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 ADR has no effect on the direction of OVERSEA CHINUNSPADR/2 i.e., OVERSEA CHINUNSPADR/2 and UNICREDIT SPA go up and down completely randomly.
Pair Corralation between OVERSEA CHINUNSPADR/2 and UNICREDIT SPA
Assuming the 90 days trading horizon OVERSEA CHINUNSPADR2 is expected to generate 0.6 times more return on investment than UNICREDIT SPA. However, OVERSEA CHINUNSPADR2 is 1.66 times less risky than UNICREDIT SPA. It trades about 0.19 of its potential returns per unit of risk. UNICREDIT SPA ADR is currently generating about 0.04 per unit of risk. If you would invest 2,120 in OVERSEA CHINUNSPADR2 on October 20, 2024 and sell it today you would earn a total of 280.00 from holding OVERSEA CHINUNSPADR2 or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OVERSEA CHINUNSPADR2 vs. UNICREDIT SPA ADR
Performance |
| Timeline |
| OVERSEA CHINUNSPADR/2 |
| UNICREDIT SPA ADR |
OVERSEA CHINUNSPADR/2 and UNICREDIT SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OVERSEA CHINUNSPADR/2 and UNICREDIT SPA
The main advantage of trading using opposite OVERSEA CHINUNSPADR/2 and UNICREDIT SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OVERSEA CHINUNSPADR/2 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.| OVERSEA CHINUNSPADR/2 vs. AOYAMA TRADING | OVERSEA CHINUNSPADR/2 vs. COFCO Joycome Foods | OVERSEA CHINUNSPADR/2 vs. United Natural Foods | OVERSEA CHINUNSPADR/2 vs. Cal Maine Foods |
| UNICREDIT SPA vs. GigaMedia | UNICREDIT SPA vs. Scientific Games | UNICREDIT SPA vs. Media and Games | UNICREDIT SPA vs. PLAYMATES TOYS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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