Correlation Between Shinkong Insurance and Union Insurance
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Union 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 Shinkong Insurance and Union Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinkong Insurance Co and Union Insurance Co, you can compare the effects of market volatilities on Shinkong Insurance and Union 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 Shinkong Insurance with a short position of Union Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Union Insurance.
Diversification Opportunities for Shinkong Insurance and Union Insurance
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinkong and Union is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Union Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Insurance and Shinkong 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 Shinkong Insurance Co are associated (or correlated) with Union Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Insurance has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Union Insurance go up and down completely randomly.
Pair Corralation between Shinkong Insurance and Union Insurance
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to under-perform the Union Insurance. In addition to that, Shinkong Insurance is 1.07 times more volatile than Union Insurance Co. It trades about -0.07 of its total potential returns per unit of risk. Union Insurance Co is currently generating about 0.18 per unit of volatility. If you would invest 3,135 in Union Insurance Co on November 3, 2024 and sell it today you would earn a total of 70.00 from holding Union Insurance Co or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Insurance Co vs. Union Insurance Co
Performance |
| Timeline |
| Shinkong Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Union Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shinkong Insurance and Union Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and Union Insurance
The main advantage of trading using opposite Shinkong Insurance and Union Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, Union 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 Union Insurance will offset losses from the drop in Union Insurance's long position.The idea behind Shinkong Insurance Co and Union Insurance Co 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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