Correlation Between Central Reinsurance and China Bills
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and China Bills 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 Central Reinsurance and China Bills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Reinsurance Corp and China Bills Finance, you can compare the effects of market volatilities on Central Reinsurance and China Bills 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 Central Reinsurance with a short position of China Bills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and China Bills.
Diversification Opportunities for Central Reinsurance and China Bills
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and China is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and China Bills Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Bills Finance and Central Reinsurance 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 Central Reinsurance Corp are associated (or correlated) with China Bills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Bills Finance has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and China Bills go up and down completely randomly.
Pair Corralation between Central Reinsurance and China Bills
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 1.76 times more return on investment than China Bills. However, Central Reinsurance is 1.76 times more volatile than China Bills Finance. It trades about 0.0 of its potential returns per unit of risk. China Bills Finance is currently generating about 0.0 per unit of risk. If you would invest 2,560 in Central Reinsurance Corp on September 22, 2024 and sell it today you would earn a total of 0.00 from holding Central Reinsurance Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Reinsurance Corp vs. China Bills Finance
Performance |
| Timeline |
| Central Reinsurance Corp |
| China Bills Finance |
Central Reinsurance and China Bills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and China Bills
The main advantage of trading using opposite Central Reinsurance and China Bills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, China Bills 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 China Bills will offset losses from the drop in China Bills' long position.| Central Reinsurance vs. LARGAN Precision Co | Central Reinsurance vs. Evergreen Marine Corp | Central Reinsurance vs. MediaTek | Central Reinsurance vs. Wiwynn Corp |
| China Bills vs. Chang Hwa Commercial | China Bills vs. IBF Financial Holdings | China Bills vs. Taiwan Business Bank | China Bills vs. Yuanta Financial Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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