Correlation Between Voestalpine and UNIQA Insurance

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

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

Diversification Opportunities for Voestalpine and UNIQA Insurance

0.56

Correlation Coefficient

Voestalpine  UNIQA Insurance

Very weak diversification

The 3 months correlation between Voestalpine and UNIQA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Voestalpine AG and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group and Voestalpine 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 Voestalpine AG 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 Group has no effect on the direction of Voestalpine i.e., Voestalpine and UNIQA Insurance go up and down completely randomly.

Pair Corralation between Voestalpine and UNIQA Insurance

Assuming the 90 days trading horizon Voestalpine AG is expected to under-perform the UNIQA Insurance. In addition to that, Voestalpine is 2.57 times more volatile than UNIQA Insurance Group. It trades about -0.13 of its total potential returns per unit of risk. UNIQA Insurance Group is currently generating about -0.14 per unit of volatility. If you would invest  774.00  in UNIQA Insurance Group on September 1, 2024 and sell it today you would lose (54.00) from holding UNIQA Insurance Group or give up 6.98% of portfolio value over 90 days.

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

Voestalpine AG  vs.  UNIQA Insurance Group

Voestalpine AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voestalpine AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Voestalpine and UNIQA Insurance

The main advantage of trading using opposite Voestalpine and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voestalpine 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 Voestalpine AG and UNIQA Insurance Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.