Correlation Between United Insurance and ZTE
Can any of the company-specific risk be diversified away by investing in both United Insurance and ZTE 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 ZTE 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 ZTE Corporation, you can compare the effects of market volatilities on United Insurance and ZTE 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 ZTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and ZTE.
Diversification Opportunities for United Insurance and ZTE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and ZTE is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and ZTE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corporation 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 ZTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corporation has no effect on the direction of United Insurance i.e., United Insurance and ZTE go up and down completely randomly.
Pair Corralation between United Insurance and ZTE
Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.01 times more return on investment than ZTE. However, United Insurance is 1.01 times more volatile than ZTE Corporation. It trades about 0.17 of its potential returns per unit of risk. ZTE Corporation is currently generating about -0.02 per unit of risk. If you would invest 1,110 in United Insurance Holdings on August 28, 2024 and sell it today you would earn a total of 150.00 from holding United Insurance Holdings or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. ZTE Corp.
Performance |
| Timeline |
| United Insurance Holdings |
| ZTE Corporation |
United Insurance and ZTE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and ZTE
The main advantage of trading using opposite United Insurance and ZTE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, ZTE 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 ZTE will offset losses from the drop in ZTE's long position.| United Insurance vs. Superior Plus Corp | United Insurance vs. NMI Holdings | United Insurance vs. Origin Agritech | United Insurance vs. SIVERS SEMICONDUCTORS AB |
| ZTE vs. United Insurance Holdings | ZTE vs. Goosehead Insurance | ZTE vs. Scandinavian Tobacco Group | ZTE vs. British American Tobacco |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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