Correlation Between United Insurance and International Steels
Can any of the company-specific risk be diversified away by investing in both United Insurance and International Steels 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 International Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and International Steels, you can compare the effects of market volatilities on United Insurance and International Steels 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 International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and International Steels.
Diversification Opportunities for United Insurance and International Steels
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and International is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of United Insurance i.e., United Insurance and International Steels go up and down completely randomly.
Pair Corralation between United Insurance and International Steels
Assuming the 90 days trading horizon United Insurance is expected to generate 1.02 times more return on investment than International Steels. However, United Insurance is 1.02 times more volatile than International Steels. It trades about 0.12 of its potential returns per unit of risk. International Steels is currently generating about 0.09 per unit of risk. If you would invest 524.00 in United Insurance on November 28, 2024 and sell it today you would earn a total of 1,227 from holding United Insurance or generate 234.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.26% |
| Values | Daily Returns |
United Insurance vs. International Steels
Performance |
| Timeline |
| United Insurance |
| International Steels |
United Insurance and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and International Steels
The main advantage of trading using opposite United Insurance and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' long position.| United Insurance vs. National Foods | United Insurance vs. Sindh Modaraba Management | United Insurance vs. Standard Chartered Bank | United Insurance vs. Shaheen Insurance |
| International Steels vs. EFU General Insurance | International Steels vs. Universal Insurance | International Steels vs. Pakistan Reinsurance | International Steels vs. Wah Nobel Chemicals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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