Correlation Between UNIQA Insurance and Mercantile Investment

Can any of the company-specific risk be diversified away by investing in both UNIQA Insurance and Mercantile Investment 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 UNIQA Insurance and Mercantile Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNIQA Insurance Group and The Mercantile Investment, you can compare the effects of market volatilities on UNIQA Insurance and Mercantile Investment 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 UNIQA Insurance with a short position of Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIQA Insurance and Mercantile Investment.

Diversification Opportunities for UNIQA Insurance and Mercantile Investment

0.03

Correlation Coefficient

UNIQA Insurance  Mercantile Investment

Significant diversification

The 3 months correlation between UNIQA and Mercantile is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment and UNIQA 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 UNIQA Insurance Group are associated (or correlated) with Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Mercantile Investment go up and down completely randomly.

Pair Corralation between UNIQA Insurance and Mercantile Investment

Assuming the 90 days trading horizon UNIQA Insurance Group is expected to generate 0.81 times more return on investment than Mercantile Investment. However, UNIQA Insurance Group is 1.23 times less risky than Mercantile Investment. It trades about 0.42 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.0 per unit of risk. If you would invest  772.00  in UNIQA Insurance Group on December 25, 2024 and sell it today you would earn a total of  208.00  from holding UNIQA Insurance Group or generate 26.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UNIQA Insurance Group  vs.  The Mercantile Investment

UNIQA Insurance Group

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNIQA Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

The Mercantile Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Mercantile Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mercantile Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UNIQA Insurance and Mercantile Investment

The main advantage of trading using opposite UNIQA Insurance and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIQA Insurance position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.

The idea behind UNIQA Insurance Group and The Mercantile Investment 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.