Correlation Between United Insurance and EFU General
Can any of the company-specific risk be diversified away by investing in both United Insurance and EFU General 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 United Insurance and EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and EFU General Insurance, you can compare the effects of market volatilities on United Insurance and EFU General 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 United Insurance with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and EFU General.
Diversification Opportunities for United Insurance and EFU General
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and EFU is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and United 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 United Insurance are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of United Insurance i.e., United Insurance and EFU General go up and down completely randomly.
Pair Corralation between United Insurance and EFU General
Assuming the 90 days trading horizon United Insurance is expected to generate 0.97 times more return on investment than EFU General. However, United Insurance is 1.03 times less risky than EFU General. It trades about 0.12 of its potential returns per unit of risk. EFU General Insurance is currently generating about 0.07 per unit of risk. If you would invest 445.00 in United Insurance on August 30, 2024 and sell it today you would earn a total of 1,126 from holding United Insurance or generate 253.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 69.4% |
| Values | Daily Returns |
United Insurance vs. EFU General Insurance
Performance |
| Timeline |
| United Insurance |
| EFU General Insurance |
United Insurance and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and EFU General
The main advantage of trading using opposite United Insurance and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General's long position.| United Insurance vs. Masood Textile Mills | United Insurance vs. Fauji Foods | United Insurance vs. KSB Pumps | United Insurance vs. Mari Petroleum |
| EFU General vs. Masood Textile Mills | EFU General vs. Fauji Foods | EFU General vs. KSB Pumps | EFU General vs. Mari Petroleum |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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