Correlation Between United Insurance and Nimir Industrial
Can any of the company-specific risk be diversified away by investing in both United Insurance and Nimir Industrial 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 Nimir Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and Nimir Industrial Chemical, you can compare the effects of market volatilities on United Insurance and Nimir Industrial 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 Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Nimir Industrial.
Diversification Opportunities for United Insurance and Nimir Industrial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Nimir is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical 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 Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of United Insurance i.e., United Insurance and Nimir Industrial go up and down completely randomly.
Pair Corralation between United Insurance and Nimir Industrial
Assuming the 90 days trading horizon United Insurance is expected to generate 0.86 times more return on investment than Nimir Industrial. However, United Insurance is 1.17 times less risky than Nimir Industrial. It trades about 0.12 of its potential returns per unit of risk. Nimir Industrial Chemical is currently generating about 0.07 per unit of risk. If you would invest 443.00 in United Insurance on August 28, 2024 and sell it today you would earn a total of 1,132 from holding United Insurance or generate 255.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.11% |
| Values | Daily Returns |
United Insurance vs. Nimir Industrial Chemical
Performance |
| Timeline |
| United Insurance |
| Nimir Industrial Chemical |
United Insurance and Nimir Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Nimir Industrial
The main advantage of trading using opposite United Insurance and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial's long position.| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United Insurance vs. MCB Bank |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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