Correlation Between UNIQA Insurance and Photon Energy

Can any of the company-specific risk be diversified away by investing in both UNIQA Insurance and Photon Energy 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 Photon Energy 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 Photon Energy NV, you can compare the effects of market volatilities on UNIQA Insurance and Photon Energy 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 Photon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIQA Insurance and Photon Energy.

Diversification Opportunities for UNIQA Insurance and Photon Energy

-0.81

Correlation Coefficient

UNIQA Insurance  Photon Energy

Pay attention - limited upside

The 3 months correlation between UNIQA and Photon is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and Photon Energy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photon Energy NV 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 Photon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photon Energy NV has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Photon Energy go up and down completely randomly.

Pair Corralation between UNIQA Insurance and Photon Energy

Assuming the 90 days trading horizon UNIQA Insurance Group is expected to generate 0.65 times more return on investment than Photon Energy. However, UNIQA Insurance Group is 1.53 times less risky than Photon Energy. It trades about 0.34 of its potential returns per unit of risk. Photon Energy NV is currently generating about -0.07 per unit of risk. If you would invest  19,450  in UNIQA Insurance Group on December 29, 2024 and sell it today you would earn a total of  5,090  from holding UNIQA Insurance Group or generate 26.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

UNIQA Insurance Group  vs.  Photon Energy NV

UNIQA Insurance Group

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, UNIQA Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Photon Energy NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photon Energy NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with UNIQA Insurance and Photon Energy

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

The idea behind UNIQA Insurance Group and Photon Energy NV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.