Correlation Between BenQ Materials and Union Insurance

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

By analyzing existing cross correlation between BenQ Materials Corp and Union Insurance Co, you can compare the effects of market volatilities on BenQ Materials and Union 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 BenQ Materials with a short position of Union Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Union Insurance.

Diversification Opportunities for BenQ Materials and Union Insurance

-0.17

Correlation Coefficient

BenQ Materials  Union Insurance

Good diversification

The 3 months correlation between BenQ and Union is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Union Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Insurance and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Union Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Insurance has no effect on the direction of BenQ Materials i.e., BenQ Materials and Union Insurance go up and down completely randomly.

Pair Corralation between BenQ Materials and Union Insurance

Assuming the 90 days trading horizon BenQ Materials Corp is expected to under-perform the Union Insurance. But the stock apears to be less risky and, when comparing its historical volatility, BenQ Materials Corp is 1.08 times less risky than Union Insurance. The stock trades about -0.21 of its potential returns per unit of risk. The Union Insurance Co is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  3,200  in Union Insurance Co on December 4, 2024 and sell it today you would earn a total of  200.00  from holding Union Insurance Co or generate 6.25% return on investment over 90 days.

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

BenQ Materials Corp  vs.  Union Insurance Co

BenQ Materials Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BenQ Materials Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Union Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Union Insurance Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Union Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BenQ Materials and Union Insurance

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

The idea behind BenQ Materials Corp and Union Insurance Co 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.