Correlation Between SHIN ETSU and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU 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 SHIN ETSU and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Universal Insurance Holdings, you can compare the effects of market volatilities on SHIN ETSU 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 SHIN ETSU with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and Universal Insurance.
Diversification Opportunities for SHIN ETSU and Universal Insurance
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIN and Universal is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and SHIN ETSU 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 SHIN ETSU CHEMICAL 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 SHIN ETSU i.e., SHIN ETSU and Universal Insurance go up and down completely randomly.
Pair Corralation between SHIN ETSU and Universal Insurance
Assuming the 90 days trading horizon SHIN ETSU is expected to generate 1.86 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, SHIN ETSU CHEMICAL is 1.09 times less risky than Universal Insurance. It trades about 0.05 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,255 in Universal Insurance Holdings on August 29, 2024 and sell it today you would earn a total of 905.00 from holding Universal Insurance Holdings or generate 72.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Universal Insurance Holdings
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Universal Insurance |
SHIN ETSU and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and Universal Insurance
The main advantage of trading using opposite SHIN ETSU and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU 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 SHIN ETSU CHEMICAL 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. PICC Property and | Universal Insurance vs. QBE Insurance Group | Universal Insurance vs. Superior Plus Corp | Universal Insurance vs. SIVERS SEMICONDUCTORS AB |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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