Correlation Between UNIQA INSURANCE and Constellation Software

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

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

Diversification Opportunities for UNIQA INSURANCE and Constellation Software

-0.14

Correlation Coefficient

UNIQA INSURANCE  Constellation Software

Good diversification

The 3 months correlation between UNIQA and Constellation is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA INSURANCE GR and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software and UNIQA INSURANCE 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 UNIQA INSURANCE GR are associated (or correlated) with Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of UNIQA INSURANCE i.e., UNIQA INSURANCE and Constellation Software go up and down completely randomly.

Pair Corralation between UNIQA INSURANCE and Constellation Software

Assuming the 90 days trading horizon UNIQA INSURANCE is expected to generate 4.94 times less return on investment than Constellation Software. But when comparing it to its historical volatility, UNIQA INSURANCE GR is 1.8 times less risky than Constellation Software. It trades about 0.04 of its potential returns per unit of risk. Constellation Software is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  188,744  in Constellation Software on October 4, 2024 and sell it today you would earn a total of  114,256  from holding Constellation Software or generate 60.53% return on investment over 90 days.

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

UNIQA INSURANCE GR  vs.  Constellation Software

UNIQA INSURANCE GR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA INSURANCE GR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UNIQA INSURANCE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Constellation Software

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Constellation Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UNIQA INSURANCE and Constellation Software

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

The idea behind UNIQA INSURANCE GR and Constellation Software 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .