Correlation Between Uniper SE and Dassault Aviation

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

By analyzing existing cross correlation between Uniper SE and Dassault Aviation SA, you can compare the effects of market volatilities on Uniper SE and Dassault Aviation 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 Dassault Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and Dassault Aviation.

Diversification Opportunities for Uniper SE and Dassault Aviation

-0.3

Correlation Coefficient

Uniper SE  Dassault Aviation

Very good diversification

The 3 months correlation between Uniper and Dassault is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE and Dassault Aviation SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Aviation 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 Dassault Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Aviation has no effect on the direction of Uniper SE i.e., Uniper SE and Dassault Aviation go up and down completely randomly.

Pair Corralation between Uniper SE and Dassault Aviation

Assuming the 90 days trading horizon Uniper SE is expected to under-perform the Dassault Aviation. In addition to that, Uniper SE is 1.49 times more volatile than Dassault Aviation SA. It trades about -0.21 of its total potential returns per unit of risk. Dassault Aviation SA is currently generating about -0.01 per unit of volatility. If you would invest  19,432  in Dassault Aviation SA on September 25, 2024 and sell it today you would lose (282.00) from holding Dassault Aviation SA or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Uniper SE  vs.  Dassault Aviation SA

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.

Dassault Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Aviation SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dassault Aviation is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Uniper SE and Dassault Aviation

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

The idea behind Uniper SE and Dassault Aviation SA 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.