Correlation Between UNIQA Insurance and Summit Hotel

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

By analyzing existing cross correlation between UNIQA Insurance Group and Summit Hotel Properties, you can compare the effects of market volatilities on UNIQA Insurance and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIQA Insurance and Summit Hotel.

Diversification Opportunities for UNIQA Insurance and Summit Hotel

0.56

Correlation Coefficient

UNIQA Insurance  Summit Hotel

Very weak diversification

The 3 months correlation between UNIQA and Summit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Group are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Summit Hotel go up and down completely randomly.

Pair Corralation between UNIQA Insurance and Summit Hotel

Assuming the 90 days trading horizon UNIQA Insurance Group is expected to generate 0.82 times more return on investment than Summit Hotel. However, UNIQA Insurance Group is 1.22 times less risky than Summit Hotel. It trades about 0.44 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.07 per unit of risk. If you would invest  725.00  in UNIQA Insurance Group on October 8, 2024 and sell it today you would earn a total of  64.00  from holding UNIQA Insurance Group or generate 8.83% return on investment over 90 days.

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

UNIQA Insurance Group  vs.  Summit Hotel Properties

UNIQA Insurance Group

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNIQA Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Summit Hotel Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with UNIQA Insurance and Summit Hotel

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

The idea behind UNIQA Insurance Group and Summit Hotel Properties 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.