Correlation Between PT Bank and UNIQA Insurance

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

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

Diversification Opportunities for PT Bank and UNIQA Insurance

-0.4

Correlation Coefficient

PT Bank  UNIQA Insurance

Very good diversification

The 3 months correlation between PQ9 and UNIQA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri 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 PT Bank 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 PT Bank Mandiri 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 PT Bank i.e., PT Bank and UNIQA Insurance go up and down completely randomly.

Pair Corralation between PT Bank and UNIQA Insurance

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the UNIQA Insurance. In addition to that, PT Bank is 4.11 times more volatile than UNIQA Insurance Group. It trades about -0.14 of its total potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.37 per unit of volatility. If you would invest  728.00  in UNIQA Insurance Group on October 10, 2024 and sell it today you would earn a total of  57.00  from holding UNIQA Insurance Group or generate 7.83% return on investment over 90 days.

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

PT Bank Mandiri  vs.  UNIQA Insurance Group

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

UNIQA Insurance Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, UNIQA Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Bank and UNIQA Insurance

The main advantage of trading using opposite PT Bank and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Mandiri 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.