Correlation Between Unifique Telecomunicaes and Banco Bradesco

Can any of the company-specific risk be diversified away by investing in both Unifique Telecomunicaes and Banco Bradesco 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 Unifique Telecomunicaes and Banco Bradesco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Unifique Telecomunicaes SA and Banco Bradesco SA, you can compare the effects of market volatilities on Unifique Telecomunicaes and Banco Bradesco 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 Unifique Telecomunicaes with a short position of Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unifique Telecomunicaes and Banco Bradesco.

Diversification Opportunities for Unifique Telecomunicaes and Banco Bradesco

0.02

Correlation Coefficient

Unifique Telecomunicaes  Banco Bradesco

Significant diversification

The 3 months correlation between Unifique and Banco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Unifique Telecomunicaes SA and Banco Bradesco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco SA and Unifique Telecomunicaes 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 Unifique Telecomunicaes SA are associated (or correlated) with Banco Bradesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bradesco SA has no effect on the direction of Unifique Telecomunicaes i.e., Unifique Telecomunicaes and Banco Bradesco go up and down completely randomly.

Pair Corralation between Unifique Telecomunicaes and Banco Bradesco

Assuming the 90 days trading horizon Unifique Telecomunicaes SA is expected to generate 1.9 times more return on investment than Banco Bradesco. However, Unifique Telecomunicaes is 1.9 times more volatile than Banco Bradesco SA. It trades about -0.05 of its potential returns per unit of risk. Banco Bradesco SA is currently generating about -0.57 per unit of risk. If you would invest  389.00  in Unifique Telecomunicaes SA on August 31, 2024 and sell it today you would lose (13.00) from holding Unifique Telecomunicaes SA or give up 3.34% of portfolio value over 90 days.

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

Unifique Telecomunicaes SA  vs.  Banco Bradesco SA

Unifique Telecomunicaes

Risk-Adjusted Performance

0 of 100

Very Weak

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

Banco Bradesco SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bradesco SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Unifique Telecomunicaes and Banco Bradesco

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

The idea behind Unifique Telecomunicaes SA and Banco Bradesco 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.