Correlation Between UNIQA Insurance and Unilever PLC

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

Diversification Opportunities for UNIQA Insurance and Unilever PLC

-0.19

Correlation Coefficient

UNIQA Insurance  Unilever PLC

Good diversification

The 3 months correlation between UNIQA and Unilever is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and Unilever PLC go up and down completely randomly.

Pair Corralation between UNIQA Insurance and Unilever PLC

Assuming the 90 days trading horizon UNIQA Insurance Group is expected to generate 0.72 times more return on investment than Unilever PLC. However, UNIQA Insurance Group is 1.39 times less risky than Unilever PLC. It trades about 0.37 of its potential returns per unit of risk. Unilever PLC is currently generating about 0.0 per unit of risk. If you would invest  783.00  in UNIQA Insurance Group on December 30, 2024 and sell it today you would earn a total of  206.00  from holding UNIQA Insurance Group or generate 26.31% return on investment over 90 days.

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

UNIQA Insurance Group  vs.  Unilever PLC

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 28 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, UNIQA Insurance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Unilever PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unilever PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Unilever PLC is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with UNIQA Insurance and Unilever PLC

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

The idea behind UNIQA Insurance Group and Unilever 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..