Correlation Between Union Insurance and Kenmec Mechanical
Can any of the company-specific risk be diversified away by investing in both Union Insurance and Kenmec Mechanical 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 Kenmec Mechanical 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 Kenmec Mechanical Engineering, you can compare the effects of market volatilities on Union Insurance and Kenmec Mechanical 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 Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Insurance and Kenmec Mechanical.
Diversification Opportunities for Union Insurance and Kenmec Mechanical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Kenmec is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Union Insurance Co and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical 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 Kenmec Mechanical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmec Mechanical has no effect on the direction of Union Insurance i.e., Union Insurance and Kenmec Mechanical go up and down completely randomly.
Pair Corralation between Union Insurance and Kenmec Mechanical
Assuming the 90 days trading horizon Union Insurance is expected to generate 1.39 times less return on investment than Kenmec Mechanical. But when comparing it to its historical volatility, Union Insurance Co is 3.47 times less risky than Kenmec Mechanical. It trades about 0.12 of its potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,310 in Kenmec Mechanical Engineering on September 15, 2024 and sell it today you would earn a total of 150.00 from holding Kenmec Mechanical Engineering or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Insurance Co vs. Kenmec Mechanical Engineering
Performance |
| Timeline |
| Union Insurance |
| Kenmec Mechanical |
Union Insurance and Kenmec Mechanical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Insurance and Kenmec Mechanical
The main advantage of trading using opposite Union Insurance and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Insurance position performs unexpectedly, Kenmec Mechanical 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 Kenmec Mechanical will offset losses from the drop in Kenmec Mechanical's long position.| Union Insurance vs. Central Reinsurance Corp | Union Insurance vs. Huaku Development Co | Union Insurance vs. Fubon Financial Holding | Union Insurance vs. Chailease Holding Co |
| Kenmec Mechanical vs. Feng Hsin Steel | Kenmec Mechanical vs. Insyde Software | Kenmec Mechanical vs. Emerging Display Technologies | Kenmec Mechanical vs. Ever Clear Environmental Eng |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |