Correlation Between Union Insurance and Silicon Power
Can any of the company-specific risk be diversified away by investing in both Union Insurance and Silicon Power 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 Union Insurance and Silicon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Insurance Co and Silicon Power Computer, you can compare the effects of market volatilities on Union Insurance and Silicon Power 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 Union Insurance with a short position of Silicon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Insurance and Silicon Power.
Diversification Opportunities for Union Insurance and Silicon Power
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Union and Silicon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Union Insurance Co and Silicon Power Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Power Computer and Union 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 Union Insurance Co are associated (or correlated) with Silicon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Power Computer has no effect on the direction of Union Insurance i.e., Union Insurance and Silicon Power go up and down completely randomly.
Pair Corralation between Union Insurance and Silicon Power
Assuming the 90 days trading horizon Union Insurance Co is expected to generate 0.78 times more return on investment than Silicon Power. However, Union Insurance Co is 1.28 times less risky than Silicon Power. It trades about 0.01 of its potential returns per unit of risk. Silicon Power Computer is currently generating about 0.0 per unit of risk. If you would invest 3,270 in Union Insurance Co on November 3, 2024 and sell it today you would lose (65.00) from holding Union Insurance Co or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Insurance Co vs. Silicon Power Computer
Performance |
| Timeline |
| Union Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Silicon Power Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Union Insurance and Silicon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Insurance and Silicon Power
The main advantage of trading using opposite Union Insurance and Silicon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Insurance position performs unexpectedly, Silicon Power 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 Silicon Power will offset losses from the drop in Silicon Power's long position.The idea behind Union Insurance Co and Silicon Power Computer 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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