Correlation Between Uniper SE and CVS Health

Can any of the company-specific risk be diversified away by investing in both Uniper SE and CVS Health 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 Uniper SE and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Uniper SE and CVS Health Corp, you can compare the effects of market volatilities on Uniper SE and CVS Health 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 Uniper SE with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and CVS Health.

Diversification Opportunities for Uniper SE and CVS Health

0.65

Correlation Coefficient

Uniper SE  CVS Health

Poor diversification

The 3 months correlation between Uniper and CVS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Uniper SE 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 Uniper SE are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Uniper SE i.e., Uniper SE and CVS Health go up and down completely randomly.

Pair Corralation between Uniper SE and CVS Health

Assuming the 90 days trading horizon Uniper SE is expected to generate 0.95 times more return on investment than CVS Health. However, Uniper SE is 1.06 times less risky than CVS Health. It trades about -0.13 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.6 per unit of risk. If you would invest  4,140  in Uniper SE on September 27, 2024 and sell it today you would lose (253.00) from holding Uniper SE or give up 6.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Uniper SE  vs.  CVS Health Corp

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uniper SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVS Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Uniper SE and CVS Health

The main advantage of trading using opposite Uniper SE and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.

The idea behind Uniper SE and CVS Health Corp 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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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.