Correlation Between UBS Group and Compagnie Financiere

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

By analyzing existing cross correlation between UBS Group AG and Compagnie Financiere Tradition, you can compare the effects of market volatilities on UBS Group and Compagnie Financiere 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 UBS Group with a short position of Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Compagnie Financiere.

Diversification Opportunities for UBS Group and Compagnie Financiere

0.79

Correlation Coefficient

UBS Group  Compagnie Financiere

Poor diversification

The 3 months correlation between UBS and Compagnie is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Compagnie Financiere Tradition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and UBS Group 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 UBS Group AG are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of UBS Group i.e., UBS Group and Compagnie Financiere go up and down completely randomly.

Pair Corralation between UBS Group and Compagnie Financiere

Assuming the 90 days trading horizon UBS Group AG is expected to generate 1.31 times more return on investment than Compagnie Financiere. However, UBS Group is 1.31 times more volatile than Compagnie Financiere Tradition. It trades about 0.19 of its potential returns per unit of risk. Compagnie Financiere Tradition is currently generating about 0.18 per unit of risk. If you would invest  2,421  in UBS Group AG on April 23, 2025 and sell it today you would earn a total of  513.00  from holding UBS Group AG or generate 21.19% return on investment over 90 days.

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

UBS Group AG  vs.  Compagnie Financiere Tradition

UBS Group AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, UBS Group showed solid returns over the last few months and may actually be approaching a breakup point.

Compagnie Financiere

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financiere Tradition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compagnie Financiere showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBS Group and Compagnie Financiere

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

The idea behind UBS Group AG and Compagnie Financiere Tradition 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.