Correlation Between PLAY2CHILL and Universal Insurance

Can any of the company-specific risk be diversified away by investing in both PLAY2CHILL and Universal Insurance 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 PLAY2CHILL and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLAY2CHILL SA ZY and Universal Insurance Holdings, you can compare the effects of market volatilities on PLAY2CHILL and Universal Insurance 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 PLAY2CHILL with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAY2CHILL and Universal Insurance.

Diversification Opportunities for PLAY2CHILL and Universal Insurance

0.34

Correlation Coefficient

PLAY2CHILL  Universal Insurance

Weak diversification

The 3 months correlation between PLAY2CHILL and Universal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PLAY2CHILL SA ZY and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and PLAY2CHILL 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 PLAY2CHILL SA ZY are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of PLAY2CHILL i.e., PLAY2CHILL and Universal Insurance go up and down completely randomly.

Pair Corralation between PLAY2CHILL and Universal Insurance

Assuming the 90 days horizon PLAY2CHILL SA ZY is expected to under-perform the Universal Insurance. But the stock apears to be less risky and, when comparing its historical volatility, PLAY2CHILL SA ZY is 1.05 times less risky than Universal Insurance. The stock trades about -0.34 of its potential returns per unit of risk. The Universal Insurance Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,060  in Universal Insurance Holdings on October 10, 2024 and sell it today you would lose (70.00) from holding Universal Insurance Holdings or give up 3.4% of portfolio value over 90 days.

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

PLAY2CHILL SA ZY  vs.  Universal Insurance Holdings

PLAY2CHILL SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAY2CHILL SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAY2CHILL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Universal Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 11 (%) 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.

Pair Trading with PLAY2CHILL and Universal Insurance

The main advantage of trading using opposite PLAY2CHILL and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAY2CHILL position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.

The idea behind PLAY2CHILL SA ZY and Universal Insurance Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.