Correlation Between Semperit Aktiengesellscha and UBM Development

Can any of the company-specific risk be diversified away by investing in both Semperit Aktiengesellscha and UBM Development 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 Semperit Aktiengesellscha and UBM Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Semperit Aktiengesellschaft Holding and UBM Development AG, you can compare the effects of market volatilities on Semperit Aktiengesellscha and UBM Development 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 Semperit Aktiengesellscha with a short position of UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semperit Aktiengesellscha and UBM Development.

Diversification Opportunities for Semperit Aktiengesellscha and UBM Development

0.17

Correlation Coefficient

Semperit Aktiengesellscha  UBM Development

Average diversification

The 3 months correlation between Semperit and UBM is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Semperit Aktiengesellschaft Ho and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development AG and Semperit Aktiengesellscha 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 Semperit Aktiengesellschaft Holding are associated (or correlated) with UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of Semperit Aktiengesellscha i.e., Semperit Aktiengesellscha and UBM Development go up and down completely randomly.

Pair Corralation between Semperit Aktiengesellscha and UBM Development

Assuming the 90 days trading horizon Semperit Aktiengesellschaft Holding is expected to generate 0.81 times more return on investment than UBM Development. However, Semperit Aktiengesellschaft Holding is 1.23 times less risky than UBM Development. It trades about -0.01 of its potential returns per unit of risk. UBM Development AG is currently generating about -0.26 per unit of risk. If you would invest  1,200  in Semperit Aktiengesellschaft Holding on September 12, 2024 and sell it today you would lose (20.00) from holding Semperit Aktiengesellschaft Holding or give up 1.67% of portfolio value over 90 days.

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

Semperit Aktiengesellschaft Ho  vs.  UBM Development AG

Semperit Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semperit Aktiengesellschaft Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Semperit Aktiengesellscha is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

UBM Development AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBM Development AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Semperit Aktiengesellscha and UBM Development

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

The idea behind Semperit Aktiengesellschaft Holding and UBM Development AG 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.