Correlation Between Universal Insurance and PT Bank
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and PT Bank 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 Universal Insurance and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance Holdings and PT Bank Maybank, you can compare the effects of market volatilities on Universal Insurance and PT Bank 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 Universal Insurance with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and PT Bank.
Diversification Opportunities for Universal Insurance and PT Bank
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and BOZA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and Universal 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 Universal Insurance Holdings are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Maybank has no effect on the direction of Universal Insurance i.e., Universal Insurance and PT Bank go up and down completely randomly.
Pair Corralation between Universal Insurance and PT Bank
Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 0.58 times more return on investment than PT Bank. However, Universal Insurance Holdings is 1.74 times less risky than PT Bank. It trades about 0.36 of its potential returns per unit of risk. PT Bank Maybank is currently generating about 0.02 per unit of risk. If you would invest 1,830 in Universal Insurance Holdings on September 1, 2024 and sell it today you would earn a total of 330.00 from holding Universal Insurance Holdings or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance Holdings vs. PT Bank Maybank
Performance |
| Timeline |
| Universal Insurance |
| PT Bank Maybank |
Universal Insurance and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and PT Bank
The main advantage of trading using opposite Universal Insurance and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| Universal Insurance vs. The Progressive | Universal Insurance vs. Fairfax Financial Holdings | Universal Insurance vs. Insurance Australia Group |
| PT Bank vs. NIPPON STEEL SPADR | PT Bank vs. Perma Fix Environmental Services | PT Bank vs. MITSUBISHI STEEL MFG | PT Bank vs. SIDETRADE EO 1 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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