Correlation Between Soken Chemical and Universal Insurance

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

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

Diversification Opportunities for Soken Chemical and Universal Insurance

0.0

Correlation Coefficient

Soken Chemical  Universal Insurance

Pay attention - limited upside

The 3 months correlation between Soken and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Soken Chemical Engineering and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Soken Chemical 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 Soken Chemical Engineering are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Soken Chemical i.e., Soken Chemical and Universal Insurance go up and down completely randomly.

Pair Corralation between Soken Chemical and Universal Insurance

If you would invest  1,687  in Universal Insurance Holdings on October 10, 2024 and sell it today you would earn a total of  303.00  from holding Universal Insurance Holdings or generate 17.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Soken Chemical Engineering  vs.  Universal Insurance Holdings

Soken Chemical Engin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Universal Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soken Chemical and Universal Insurance

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

The idea behind Soken Chemical Engineering and Universal 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.