Correlation Between UNITY BANK and NEM INSURANCE

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

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

Diversification Opportunities for UNITY BANK and NEM INSURANCE

0.0

Correlation Coefficient

UNITY BANK  NEM INSURANCE

Pay attention - limited upside

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

Pair Corralation between UNITY BANK and NEM INSURANCE

If you would invest  850.00  in NEM INSURANCE PLC on November 29, 2024 and sell it today you would earn a total of  460.00  from holding NEM INSURANCE PLC or generate 54.12% return on investment over 90 days.

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

UNITY BANK PLC  vs.  NEM INSURANCE PLC

UNITY BANK PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNITY BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, UNITY BANK is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

NEM INSURANCE PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEM INSURANCE PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NEM INSURANCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITY BANK and NEM INSURANCE

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

The idea behind UNITY BANK PLC and NEM INSURANCE PLC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.