Correlation Between United Insurance and DALATA HOTEL

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

By analyzing existing cross correlation between United Insurance Holdings and DALATA HOTEL, you can compare the effects of market volatilities on United Insurance and DALATA HOTEL 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 DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and DALATA HOTEL.

Diversification Opportunities for United Insurance and DALATA HOTEL

0.73

Correlation Coefficient

United Insurance  DALATA HOTEL

Poor diversification

The 3 months correlation between United and DALATA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL 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 Holdings are associated (or correlated) with DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of United Insurance i.e., United Insurance and DALATA HOTEL go up and down completely randomly.

Pair Corralation between United Insurance and DALATA HOTEL

Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the DALATA HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance Holdings is 1.4 times less risky than DALATA HOTEL. The stock trades about -0.2 of its potential returns per unit of risk. The DALATA HOTEL is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  443.00  in DALATA HOTEL on October 25, 2024 and sell it today you would lose (9.00) from holding DALATA HOTEL or give up 2.03% of portfolio value over 90 days.

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

United Insurance Holdings  vs.  DALATA HOTEL

United Insurance Holdings

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DALATA HOTEL

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DALATA HOTEL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DALATA HOTEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Insurance and DALATA HOTEL

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

The idea behind United Insurance Holdings and DALATA HOTEL 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.