Correlation Between United Insurance and Towellers
Can any of the company-specific risk be diversified away by investing in both United Insurance and Towellers 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 Towellers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and Towellers, you can compare the effects of market volatilities on United Insurance and Towellers 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 Towellers. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Towellers.
Diversification Opportunities for United Insurance and Towellers
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Towellers is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and Towellers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towellers 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 Towellers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towellers has no effect on the direction of United Insurance i.e., United Insurance and Towellers go up and down completely randomly.
Pair Corralation between United Insurance and Towellers
Assuming the 90 days trading horizon United Insurance is expected to generate 0.98 times more return on investment than Towellers. However, United Insurance is 1.02 times less risky than Towellers. It trades about 0.12 of its potential returns per unit of risk. Towellers is currently generating about 0.03 per unit of risk. If you would invest 706.00 in United Insurance on September 12, 2024 and sell it today you would earn a total of 910.00 from holding United Insurance or generate 128.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.26% |
| Values | Daily Returns |
United Insurance vs. Towellers
Performance |
| Timeline |
| United Insurance |
| Towellers |
United Insurance and Towellers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Towellers
The main advantage of trading using opposite United Insurance and Towellers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Towellers 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 Towellers will offset losses from the drop in Towellers' long position.| United Insurance vs. Masood Textile Mills | United Insurance vs. Fauji Foods | United Insurance vs. KSB Pumps | United Insurance vs. Mari Petroleum |
| Towellers vs. Lotte Chemical Pakistan | Towellers vs. Ittehad Chemicals | Towellers vs. Pakistan Synthetics | Towellers vs. Nimir Industrial Chemical |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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