Correlation Between Feng Ching and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Feng Ching and Central Reinsurance 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 Feng Ching and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feng Ching Metal and Central Reinsurance Corp, you can compare the effects of market volatilities on Feng Ching and Central Reinsurance 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 Feng Ching with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Ching and Central Reinsurance.
Diversification Opportunities for Feng Ching and Central Reinsurance
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Feng and Central is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Feng Ching Metal and Central Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Reinsurance Corp and Feng Ching 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 Feng Ching Metal are associated (or correlated) with Central Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Reinsurance Corp has no effect on the direction of Feng Ching i.e., Feng Ching and Central Reinsurance go up and down completely randomly.
Pair Corralation between Feng Ching and Central Reinsurance
Assuming the 90 days trading horizon Feng Ching Metal is expected to under-perform the Central Reinsurance. In addition to that, Feng Ching is 1.96 times more volatile than Central Reinsurance Corp. It trades about -0.14 of its total potential returns per unit of risk. Central Reinsurance Corp is currently generating about 0.06 per unit of volatility. If you would invest 2,505 in Central Reinsurance Corp on September 12, 2024 and sell it today you would earn a total of 85.00 from holding Central Reinsurance Corp or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Feng Ching Metal vs. Central Reinsurance Corp
Performance |
| Timeline |
| Feng Ching Metal |
| Central Reinsurance Corp |
Feng Ching and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Ching and Central Reinsurance
The main advantage of trading using opposite Feng Ching and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Ching position performs unexpectedly, Central Reinsurance 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 Central Reinsurance will offset losses from the drop in Central Reinsurance's long position.| Feng Ching vs. Voltronic Power Technology | Feng Ching vs. Advanced Energy Solution | Feng Ching vs. Simplo Technology Co | Feng Ching vs. Amtran Technology Co |
| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Fubon Financial Holding | Central Reinsurance vs. Chailease Holding Co | Central Reinsurance vs. CTBC Financial Holding |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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