Correlation Between United Insurance and PT Bank

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

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

Diversification Opportunities for United Insurance and PT Bank

-0.77

Correlation Coefficient

United Insurance  PT Bank

Pay attention - limited upside

The 3 months correlation between United and PQ9 is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and PT Bank Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Mandiri and United 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 United Insurance Holdings are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Mandiri has no effect on the direction of United Insurance i.e., United Insurance and PT Bank go up and down completely randomly.

Pair Corralation between United Insurance and PT Bank

Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.05 times more return on investment than PT Bank. However, United Insurance is 1.05 times more volatile than PT Bank Mandiri. It trades about 0.11 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about -0.06 per unit of risk. If you would invest  1,020  in United Insurance Holdings on September 20, 2024 and sell it today you would earn a total of  300.00  from holding United Insurance Holdings or generate 29.41% return on investment over 90 days.

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

United Insurance Holdings  vs.  PT Bank Mandiri

United Insurance Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United Insurance and PT Bank

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

The idea behind United Insurance Holdings and PT Bank Mandiri 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.