Correlation Between Hua Hong and Universal Insurance

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

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

Diversification Opportunities for Hua Hong and Universal Insurance

-0.71

Correlation Coefficient

Hua Hong  Universal Insurance

Pay attention - limited upside

The 3 months correlation between Hua and Universal is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Hua Hong 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 Hua Hong Semiconductor are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Hua Hong i.e., Hua Hong and Universal Insurance go up and down completely randomly.

Pair Corralation between Hua Hong and Universal Insurance

Assuming the 90 days horizon Hua Hong Semiconductor is expected to under-perform the Universal Insurance. In addition to that, Hua Hong is 1.62 times more volatile than Universal Insurance Holdings. It trades about -0.01 of its total potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.08 per unit of volatility. If you would invest  1,957  in Universal Insurance Holdings on April 20, 2025 and sell it today you would earn a total of  183.00  from holding Universal Insurance Holdings or generate 9.35% return on investment over 90 days.

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

Hua Hong Semiconductor  vs.  Universal Insurance Holdings

Hua Hong Semiconductor

Risk-Adjusted Performance

Very Weak

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

Universal Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Insurance Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Universal Insurance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Hua Hong and Universal Insurance

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

The idea behind Hua Hong Semiconductor and Universal Insurance Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.