Correlation Between United Insurance and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both United Insurance and Aluminumof China 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 United Insurance and Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Aluminum of, you can compare the effects of market volatilities on United Insurance and Aluminumof China 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 United Insurance with a short position of Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Aluminumof China.
Diversification Opportunities for United Insurance and Aluminumof China
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Aluminumof is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and United 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 United Insurance Holdings are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of United Insurance i.e., United Insurance and Aluminumof China go up and down completely randomly.
Pair Corralation between United Insurance and Aluminumof China
Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Aluminumof China. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance Holdings is 1.36 times less risky than Aluminumof China. The stock trades about -0.14 of its potential returns per unit of risk. The Aluminum of is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Aluminum of on October 14, 2024 and sell it today you would earn a total of 1.00 from holding Aluminum of or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Aluminum of
Performance |
| Timeline |
| United Insurance Holdings |
| Aluminumof China |
United Insurance and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Aluminumof China
The main advantage of trading using opposite United Insurance and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| United Insurance vs. QBE Insurance Group | United Insurance vs. Superior Plus Corp | United Insurance vs. NMI Holdings | United Insurance vs. SIVERS SEMICONDUCTORS AB |
| Aluminumof China vs. Stag Industrial | Aluminumof China vs. Kingdee International Software | Aluminumof China vs. Unity Software | Aluminumof China vs. USU Software AG |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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