Correlation Between Hsing Ta and First Insurance
Can any of the company-specific risk be diversified away by investing in both Hsing Ta and First 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 Hsing Ta and First Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsing Ta Cement and First Insurance Co, you can compare the effects of market volatilities on Hsing Ta and First 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 Hsing Ta with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and First Insurance.
Diversification Opportunities for Hsing Ta and First Insurance
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hsing and First is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance and Hsing Ta 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 Hsing Ta Cement are associated (or correlated) with First Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Insurance has no effect on the direction of Hsing Ta i.e., Hsing Ta and First Insurance go up and down completely randomly.
Pair Corralation between Hsing Ta and First Insurance
Assuming the 90 days trading horizon Hsing Ta Cement is expected to under-perform the First Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Hsing Ta Cement is 2.13 times less risky than First Insurance. The stock trades about -0.15 of its potential returns per unit of risk. The First Insurance Co is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,280 in First Insurance Co on August 30, 2024 and sell it today you would earn a total of 180.00 from holding First Insurance Co or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsing Ta Cement vs. First Insurance Co
Performance |
| Timeline |
| Hsing Ta Cement |
| First Insurance |
Hsing Ta and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsing Ta and First Insurance
The main advantage of trading using opposite Hsing Ta and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsing Ta position performs unexpectedly, First 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 First Insurance will offset losses from the drop in First Insurance's long position.| Hsing Ta vs. Universal Cement Corp | Hsing Ta vs. Chia Hsin Cement | Hsing Ta vs. AGV Products Corp | Hsing Ta vs. Grand Pacific Petrochemical |
| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Chang Hwa Commercial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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