Correlation Between FORTEC ELEKTRONIK and United Insurance

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

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

Diversification Opportunities for FORTEC ELEKTRONIK and United Insurance

0.25

Correlation Coefficient

FORTEC ELEKTRONIK  United Insurance

Modest diversification

The 3 months correlation between FORTEC and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC ELEKTRONIK and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings and FORTEC ELEKTRONIK 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 FORTEC ELEKTRONIK are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of FORTEC ELEKTRONIK i.e., FORTEC ELEKTRONIK and United Insurance go up and down completely randomly.

Pair Corralation between FORTEC ELEKTRONIK and United Insurance

Assuming the 90 days trading horizon FORTEC ELEKTRONIK is expected to generate 0.67 times more return on investment than United Insurance. However, FORTEC ELEKTRONIK is 1.5 times less risky than United Insurance. It trades about -0.01 of its potential returns per unit of risk. United Insurance Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,960  in FORTEC ELEKTRONIK on October 10, 2024 and sell it today you would lose (10.00) from holding FORTEC ELEKTRONIK or give up 0.51% of portfolio value over 90 days.

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

FORTEC ELEKTRONIK  vs.  United Insurance Holdings

FORTEC ELEKTRONIK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FORTEC ELEKTRONIK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FORTEC ELEKTRONIK is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

United Insurance Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORTEC ELEKTRONIK and United Insurance

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

The idea behind FORTEC ELEKTRONIK and United 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.