Correlation Between Union Bank and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Union Bank 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 Union Bank and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Bank of and Central Reinsurance Corp, you can compare the effects of market volatilities on Union Bank 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 Union Bank with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Central Reinsurance.
Diversification Opportunities for Union Bank and Central Reinsurance
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and Central is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of 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 Union Bank 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 Union Bank of 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 Union Bank i.e., Union Bank and Central Reinsurance go up and down completely randomly.
Pair Corralation between Union Bank and Central Reinsurance
Assuming the 90 days trading horizon Union Bank of is expected to generate 0.7 times more return on investment than Central Reinsurance. However, Union Bank of is 1.43 times less risky than Central Reinsurance. It trades about 0.14 of its potential returns per unit of risk. Central Reinsurance Corp is currently generating about -0.16 per unit of risk. If you would invest 1,515 in Union Bank of on August 30, 2024 and sell it today you would earn a total of 35.00 from holding Union Bank of or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. Central Reinsurance Corp
Performance |
| Timeline |
| Union Bank |
| Central Reinsurance Corp |
Union Bank and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and Central Reinsurance
The main advantage of trading using opposite Union Bank and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank 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.| Union Bank vs. Taiwan Business Bank | Union Bank vs. Chang Hwa Commercial | Union Bank vs. EnTie Commercial Bank | Union Bank vs. Bank of Kaohsiung |
| Central Reinsurance vs. Taiwan Secom Co | Central Reinsurance vs. TTET Union Corp | Central Reinsurance vs. China Steel Chemical | Central Reinsurance vs. Taiwan Shin Kong |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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