Correlation Between Universal Insurance and ADRIATIC METALS

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

By analyzing existing cross correlation between Universal Insurance Holdings and ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on Universal Insurance and ADRIATIC METALS 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 Universal Insurance with a short position of ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and ADRIATIC METALS.

Diversification Opportunities for Universal Insurance and ADRIATIC METALS

0.26

Correlation Coefficient

Universal Insurance  ADRIATIC METALS

Modest diversification

The 3 months correlation between Universal and ADRIATIC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance Holdings and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS and Universal 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 Universal Insurance Holdings are associated (or correlated) with ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of Universal Insurance i.e., Universal Insurance and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between Universal Insurance and ADRIATIC METALS

Assuming the 90 days horizon Universal Insurance Holdings is expected to generate 0.84 times more return on investment than ADRIATIC METALS. However, Universal Insurance Holdings is 1.19 times less risky than ADRIATIC METALS. It trades about 0.06 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.02 per unit of risk. If you would invest  1,021  in Universal Insurance Holdings on October 11, 2024 and sell it today you would earn a total of  859.00  from holding Universal Insurance Holdings or generate 84.13% return on investment over 90 days.

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

Universal Insurance Holdings  vs.  ADRIATIC METALS LS 013355

Universal Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

ADRIATIC METALS LS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ADRIATIC METALS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal Insurance and ADRIATIC METALS

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

The idea behind Universal Insurance Holdings and ADRIATIC METALS LS 013355 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.