Correlation Between Universal Insurance and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and BANK RAKYAT 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 BANK RAKYAT 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 BANK RAKYAT IND, you can compare the effects of market volatilities on Universal Insurance and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and BANK RAKYAT.
Diversification Opportunities for Universal Insurance and BANK RAKYAT
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and BANK is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Universal Insurance i.e., Universal Insurance and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Universal Insurance and BANK RAKYAT
Assuming the 90 days horizon Universal Insurance Holdings is expected to under-perform the BANK RAKYAT. But the stock apears to be less risky and, when comparing its historical volatility, Universal Insurance Holdings is 1.34 times less risky than BANK RAKYAT. The stock trades about -0.2 of its potential returns per unit of risk. The BANK RAKYAT IND is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 24.00 in BANK RAKYAT IND on October 25, 2024 and sell it today you would earn a total of 0.00 from holding BANK RAKYAT IND or generate 0.0% 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. BANK RAKYAT IND
Performance |
| Timeline |
| Universal Insurance |
| BANK RAKYAT IND |
Universal Insurance and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and BANK RAKYAT
The main advantage of trading using opposite Universal Insurance and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| Universal Insurance vs. PICC Property and | Universal Insurance vs. Fairfax Financial Holdings | Universal Insurance vs. QBE Insurance Group | Universal Insurance vs. Insurance Australia Group |
| BANK RAKYAT vs. Wyndham Hotels Resorts | BANK RAKYAT vs. Choice Hotels International | BANK RAKYAT vs. NH HOTEL GROUP | BANK RAKYAT vs. Gol Intelligent Airlines |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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