Correlation Between Universal Insurance and JS Investments

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

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

Diversification Opportunities for Universal Insurance and JS Investments

-0.06

Correlation Coefficient

Universal Insurance  JS Investments

Good diversification

The 3 months correlation between Universal and JSIL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Universal 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 Universal Insurance are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Universal Insurance i.e., Universal Insurance and JS Investments go up and down completely randomly.

Pair Corralation between Universal Insurance and JS Investments

Assuming the 90 days trading horizon Universal Insurance is expected to generate 1.66 times more return on investment than JS Investments. However, Universal Insurance is 1.66 times more volatile than JS Investments. It trades about 0.03 of its potential returns per unit of risk. JS Investments is currently generating about -0.06 per unit of risk. If you would invest  1,050  in Universal Insurance on December 24, 2024 and sell it today you would lose (16.00) from holding Universal Insurance or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Universal Insurance  vs.  JS Investments

Universal Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Universal Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JS Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Universal Insurance and JS Investments

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

The idea behind Universal Insurance and JS Investments 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 CEOs Directory module to screen CEOs from public companies around the world.