Correlation Between United Insurance and Indutrade

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Can any of the company-specific risk be diversified away by investing in both United Insurance and Indutrade 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 Indutrade 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 Indutrade AB, you can compare the effects of market volatilities on United Insurance and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Indutrade.

Diversification Opportunities for United Insurance and Indutrade

UnitedIndutradeDiversified AwayUnitedIndutradeDiversified Away100%
-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between United and Indutrade is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of United Insurance i.e., United Insurance and Indutrade go up and down completely randomly.

Pair Corralation between United Insurance and Indutrade

Assuming the 90 days horizon United Insurance is expected to generate 2.52 times less return on investment than Indutrade. In addition to that, United Insurance is 1.41 times more volatile than Indutrade AB. It trades about 0.08 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.3 per unit of volatility. If you would invest  2,602  in Indutrade AB on November 25, 2024 and sell it today you would earn a total of  258.00  from holding Indutrade AB or generate 9.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

United Insurance Holdings  vs.  Indutrade AB

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.150UI I1M
       Timeline  
United Insurance Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days United Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.51212.513
Indutrade AB 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Indutrade AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Indutrade reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb242526272829

United Insurance and Indutrade Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.47-5.6-3.72-1.850.03131.883.795.717.62 0.050.100.15
JavaScript chart by amCharts 3.21.150UI I1M
       Returns  

Pair Trading with United Insurance and Indutrade

The main advantage of trading using opposite United Insurance and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.
The idea behind United Insurance Holdings and Indutrade AB 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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