Correlation Between Donegal Investment and Uniphar Group

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

By analyzing existing cross correlation between Donegal Investment Group and Uniphar Group PLC, you can compare the effects of market volatilities on Donegal Investment and Uniphar Group 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 Donegal Investment with a short position of Uniphar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Investment and Uniphar Group.

Diversification Opportunities for Donegal Investment and Uniphar Group

0.33

Correlation Coefficient

Donegal Investment  Uniphar Group

Weak diversification

The 3 months correlation between Donegal and Uniphar is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Investment Group and Uniphar Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniphar Group PLC and Donegal Investment 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 Donegal Investment Group are associated (or correlated) with Uniphar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniphar Group PLC has no effect on the direction of Donegal Investment i.e., Donegal Investment and Uniphar Group go up and down completely randomly.

Pair Corralation between Donegal Investment and Uniphar Group

Assuming the 90 days trading horizon Donegal Investment Group is expected to generate 49.93 times more return on investment than Uniphar Group. However, Donegal Investment is 49.93 times more volatile than Uniphar Group PLC. It trades about 0.11 of its potential returns per unit of risk. Uniphar Group PLC is currently generating about 0.12 per unit of risk. If you would invest  1,650  in Donegal Investment Group on November 28, 2024 and sell it today you would earn a total of  10.00  from holding Donegal Investment Group or generate 0.61% return on investment over 90 days.

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

Donegal Investment Group  vs.  Uniphar Group PLC

Donegal Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Investment Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Donegal Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Uniphar Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uniphar Group PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Uniphar Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Donegal Investment and Uniphar Group

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

The idea behind Donegal Investment Group and Uniphar Group 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.