Correlation Between Monks Investment and UNIQA Insurance

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

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

Diversification Opportunities for Monks Investment and UNIQA Insurance

-0.49

Correlation Coefficient

Monks Investment  UNIQA Insurance

Very good diversification

The 3 months correlation between Monks and UNIQA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group and Monks 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 Monks Investment Trust are associated (or correlated) with UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Monks Investment i.e., Monks Investment and UNIQA Insurance go up and down completely randomly.

Pair Corralation between Monks Investment and UNIQA Insurance

Assuming the 90 days trading horizon Monks Investment Trust is expected to under-perform the UNIQA Insurance. In addition to that, Monks Investment is 1.32 times more volatile than UNIQA Insurance Group. It trades about -0.06 of its total potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.39 per unit of volatility. If you would invest  773.00  in UNIQA Insurance Group on December 24, 2024 and sell it today you would earn a total of  199.00  from holding UNIQA Insurance Group or generate 25.74% return on investment over 90 days.

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

Monks Investment Trust  vs.  UNIQA Insurance Group

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monks Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monks Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

UNIQA Insurance Group

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNIQA Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monks Investment and UNIQA Insurance

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

The idea behind Monks Investment Trust and UNIQA Insurance Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.