Correlation Between UNIQA Insurance and Software Circle
Can any of the company-specific risk be diversified away by investing in both UNIQA Insurance and Software Circle 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 UNIQA Insurance and Software Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIQA Insurance Group and Software Circle plc, you can compare the effects of market volatilities on UNIQA Insurance and Software Circle 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 UNIQA Insurance with a short position of Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIQA Insurance and Software Circle.
Diversification Opportunities for UNIQA Insurance and Software Circle
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNIQA and Software is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc and UNIQA Insurance 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 UNIQA Insurance Group are associated (or correlated) with Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Software Circle go up and down completely randomly.
Pair Corralation between UNIQA Insurance and Software Circle
Assuming the 90 days trading horizon UNIQA Insurance is expected to generate 1.33 times less return on investment than Software Circle. But when comparing it to its historical volatility, UNIQA Insurance Group is 1.07 times less risky than Software Circle. It trades about 0.15 of its potential returns per unit of risk. Software Circle plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,350 in Software Circle plc on November 5, 2024 and sell it today you would earn a total of 100.00 from holding Software Circle plc or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIQA Insurance Group vs. Software Circle plc
Performance |
| Timeline |
| UNIQA Insurance Group |
| Software Circle plc |
UNIQA Insurance and Software Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIQA Insurance and Software Circle
The main advantage of trading using opposite UNIQA Insurance and Software Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIQA Insurance position performs unexpectedly, Software Circle 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 Software Circle will offset losses from the drop in Software Circle's long position.| UNIQA Insurance vs. New Residential Investment | UNIQA Insurance vs. Bankers Investment Trust | UNIQA Insurance vs. Scottish American Investment | UNIQA Insurance vs. Chrysalis Investments |
| Software Circle vs. PureTech Health plc | Software Circle vs. Bellevue Healthcare Trust | Software Circle vs. Target Healthcare REIT | Software Circle vs. Delta Air Lines |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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