Correlation Between United Insurance and Hays Plc

Can any of the company-specific risk be diversified away by investing in both United Insurance and Hays Plc 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 Hays Plc 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 Hays plc, you can compare the effects of market volatilities on United Insurance and Hays Plc 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 Hays Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Hays Plc.

Diversification Opportunities for United Insurance and Hays Plc

-0.22

Correlation Coefficient

United Insurance  Hays Plc

Very good diversification

The 3 months correlation between United and Hays is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Hays plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hays plc 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 Hays Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hays plc has no effect on the direction of United Insurance i.e., United Insurance and Hays Plc go up and down completely randomly.

Pair Corralation between United Insurance and Hays Plc

Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.46 times more return on investment than Hays Plc. However, United Insurance is 1.46 times more volatile than Hays plc. It trades about 0.06 of its potential returns per unit of risk. Hays plc is currently generating about -0.01 per unit of risk. If you would invest  667.00  in United Insurance Holdings on October 25, 2024 and sell it today you would earn a total of  493.00  from holding United Insurance Holdings or generate 73.91% return on investment over 90 days.

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

United Insurance Holdings  vs.  Hays plc

United Insurance Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

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.

Hays plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hays plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United Insurance and Hays Plc

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

The idea behind United Insurance Holdings and Hays plc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.