Correlation Between Western Digital and UNIQA INSURANCE

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

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

Diversification Opportunities for Western Digital and UNIQA INSURANCE

-0.37

Correlation Coefficient

Western Digital  UNIQA INSURANCE

Very good diversification

The 3 months correlation between Western and UNIQA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and UNIQA INSURANCE GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA INSURANCE GR and Western Digital 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 Western Digital are associated (or correlated) with UNIQA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA INSURANCE GR has no effect on the direction of Western Digital i.e., Western Digital and UNIQA INSURANCE go up and down completely randomly.

Pair Corralation between Western Digital and UNIQA INSURANCE

Assuming the 90 days horizon Western Digital is expected to under-perform the UNIQA INSURANCE. In addition to that, Western Digital is 2.03 times more volatile than UNIQA INSURANCE GR. It trades about -0.32 of its total potential returns per unit of risk. UNIQA INSURANCE GR is currently generating about 0.18 per unit of volatility. If you would invest  731.00  in UNIQA INSURANCE GR on September 24, 2024 and sell it today you would earn a total of  30.00  from holding UNIQA INSURANCE GR or generate 4.1% return on investment over 90 days.

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

Western Digital  vs.  UNIQA INSURANCE GR

Western Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Western Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UNIQA INSURANCE GR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA INSURANCE GR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UNIQA INSURANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Digital and UNIQA INSURANCE

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

The idea behind Western Digital and UNIQA INSURANCE GR 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.