Correlation Between Unico American and Kingstone Companies

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

By analyzing existing cross correlation between Unico American and Kingstone Companies, you can compare the effects of market volatilities on Unico American and Kingstone Companies 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 Unico American with a short position of Kingstone Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unico American and Kingstone Companies.

Diversification Opportunities for Unico American and Kingstone Companies

-0.49

Correlation Coefficient

Unico American  Kingstone Companies

Very good diversification

The 3 months correlation between Unico and Kingstone is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Unico American and Kingstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstone Companies and Unico American 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 Unico American are associated (or correlated) with Kingstone Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstone Companies has no effect on the direction of Unico American i.e., Unico American and Kingstone Companies go up and down completely randomly.

Pair Corralation between Unico American and Kingstone Companies

Given the investment horizon of 90 days Unico American is expected to generate 1.25 times more return on investment than Kingstone Companies. However, Unico American is 1.25 times more volatile than Kingstone Companies. It trades about 0.15 of its potential returns per unit of risk. Kingstone Companies is currently generating about -0.02 per unit of risk. If you would invest  5.80  in Unico American on December 20, 2024 and sell it today you would earn a total of  1.20  from holding Unico American or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	43.33%
Values	Daily Returns

Unico American  vs.  Kingstone Companies

Unico American

Risk-Adjusted Performance

Good

Over the last 90 days Unico American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very inconsistent basic indicators, Unico American displayed solid returns over the last few months and may actually be approaching a breakup point.

Kingstone Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingstone Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Unico American and Kingstone Companies

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

The idea behind Unico American and Kingstone Companies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.