Correlation Between UNIQA Insurance and VERBUND AG

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

Diversification Opportunities for UNIQA Insurance and VERBUND AG

0.27

Correlation Coefficient

UNIQA Insurance  VERBUND AG

Modest diversification

The 3 months correlation between UNIQA and VERBUND is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UNIQA Insurance Group and VERBUND AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG 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 VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG has no effect on the direction of UNIQA Insurance i.e., UNIQA Insurance and VERBUND AG go up and down completely randomly.

Pair Corralation between UNIQA Insurance and VERBUND AG

Assuming the 90 days trading horizon UNIQA Insurance Group is expected to under-perform the VERBUND AG. But the stock apears to be less risky and, when comparing its historical volatility, UNIQA Insurance Group is 2.05 times less risky than VERBUND AG. The stock trades about -0.14 of its potential returns per unit of risk. The VERBUND AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7,740  in VERBUND AG on September 2, 2024 and sell it today you would lose (190.00) from holding VERBUND AG or give up 2.45% of portfolio value over 90 days.

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

UNIQA Insurance Group  vs.  VERBUND AG

UNIQA Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIQA Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

VERBUND AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VERBUND AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, VERBUND AG 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 VERBUND AG

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

The idea behind UNIQA Insurance Group and VERBUND AG 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.