Correlation Between Oberbank and UNIQA Insurance

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

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

Diversification Opportunities for Oberbank and UNIQA Insurance

0.52

Correlation Coefficient

Oberbank  UNIQA Insurance

Very weak diversification

The 3 months correlation between Oberbank and UNIQA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Oberbank AG 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 Oberbank 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 Oberbank AG 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 Oberbank i.e., Oberbank and UNIQA Insurance go up and down completely randomly.

Pair Corralation between Oberbank and UNIQA Insurance

Assuming the 90 days trading horizon Oberbank is expected to generate 95.6 times less return on investment than UNIQA Insurance. But when comparing it to its historical volatility, Oberbank AG is 15.93 times less risky than UNIQA Insurance. It trades about 0.07 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  770.00  in UNIQA Insurance Group on December 27, 2024 and sell it today you would earn a total of  236.00  from holding UNIQA Insurance Group or generate 30.65% return on investment over 90 days.

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

Oberbank AG  vs.  UNIQA Insurance Group

Oberbank AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oberbank AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Oberbank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

UNIQA Insurance Group

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, UNIQA Insurance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oberbank and UNIQA Insurance

The main advantage of trading using opposite Oberbank and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oberbank 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 Oberbank AG 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.