Correlation Between PT Bank and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both PT Bank and Universal Insurance 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 PT Bank and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Maybank and Universal Insurance Holdings, you can compare the effects of market volatilities on PT Bank and Universal Insurance 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 PT Bank with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Universal Insurance.
Diversification Opportunities for PT Bank and Universal Insurance
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between BOZA and Universal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and PT Bank 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 PT Bank Maybank are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of PT Bank i.e., PT Bank and Universal Insurance go up and down completely randomly.
Pair Corralation between PT Bank and Universal Insurance
Assuming the 90 days trading horizon PT Bank is expected to generate 3.46 times less return on investment than Universal Insurance. In addition to that, PT Bank is 1.75 times more volatile than Universal Insurance Holdings. It trades about 0.01 of its total potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.07 per unit of volatility. If you would invest 1,487 in Universal Insurance Holdings on August 29, 2024 and sell it today you would earn a total of 653.00 from holding Universal Insurance Holdings or generate 43.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Maybank vs. Universal Insurance Holdings
Performance |
| Timeline |
| PT Bank Maybank |
| Universal Insurance |
PT Bank and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Universal Insurance
The main advantage of trading using opposite PT Bank and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.The idea behind PT Bank Maybank and Universal Insurance Holdings 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.| Universal Insurance vs. Algonquin Power Utilities | Universal Insurance vs. BE Semiconductor Industries | Universal Insurance vs. NORTHEAST UTILITIES | Universal Insurance vs. SERI INDUSTRIAL EO |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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