Correlation Between United Insurance and Indutrade
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
-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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Insurance Holdings vs. Indutrade AB
Performance |
Timeline |
United Insurance Holdings |
Indutrade AB |
United Insurance and Indutrade Volatility Contrast
Predicted Return Density |
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.United Insurance vs. HUTCHISON TELECOMM | ||
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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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