Correlation Between Asia Insurance and Unity Foods

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

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

Diversification Opportunities for Asia Insurance and Unity Foods

0.11

Correlation Coefficient

Asia Insurance  Unity Foods

Average diversification

The 3 months correlation between Asia and Unity is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Asia Insurance and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods and Asia 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 Asia Insurance are associated (or correlated) with Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of Asia Insurance i.e., Asia Insurance and Unity Foods go up and down completely randomly.

Pair Corralation between Asia Insurance and Unity Foods

Assuming the 90 days trading horizon Asia Insurance is expected to generate 1.28 times more return on investment than Unity Foods. However, Asia Insurance is 1.28 times more volatile than Unity Foods. It trades about 0.5 of its potential returns per unit of risk. Unity Foods is currently generating about 0.01 per unit of risk. If you would invest  1,400  in Asia Insurance on April 24, 2025 and sell it today you would earn a total of  500.00  from holding Asia Insurance or generate 35.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	30.0%
Values	Daily Returns

Asia Insurance  vs.  Unity Foods

Asia Insurance

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Insurance are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Asia Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Unity Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Unity Foods is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Insurance and Unity Foods

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

The idea behind Asia Insurance and Unity Foods 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.