Correlation Between Unibel SA and Voyageurs

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

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

Diversification Opportunities for Unibel SA and Voyageurs

0.37

Correlation Coefficient

Unibel SA  Voyageurs

Weak diversification

The 3 months correlation between Unibel and Voyageurs is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Unibel SA and Voyageurs du Monde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voyageurs du Monde and Unibel SA 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 Unibel SA are associated (or correlated) with Voyageurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voyageurs du Monde has no effect on the direction of Unibel SA i.e., Unibel SA and Voyageurs go up and down completely randomly.

Pair Corralation between Unibel SA and Voyageurs

Assuming the 90 days trading horizon Unibel SA is expected to generate 0.86 times more return on investment than Voyageurs. However, Unibel SA is 1.16 times less risky than Voyageurs. It trades about -0.04 of its potential returns per unit of risk. Voyageurs du Monde is currently generating about -0.22 per unit of risk. If you would invest  81,500  in Unibel SA on August 30, 2024 and sell it today you would lose (2,500) from holding Unibel SA or give up 3.07% of portfolio value over 90 days.

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

Unibel SA  vs.  Voyageurs du Monde

Unibel SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unibel SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Unibel SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Voyageurs du Monde

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voyageurs du Monde has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Unibel SA and Voyageurs

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

The idea behind Unibel SA and Voyageurs du Monde 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.