Correlation Between Central Reinsurance and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Shinkong 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 Central Reinsurance and Shinkong Insurance 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 Shinkong Insurance Co, you can compare the effects of market volatilities on Central Reinsurance and Shinkong 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 Central Reinsurance with a short position of Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Shinkong Insurance.
Diversification Opportunities for Central Reinsurance and Shinkong Insurance
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Shinkong is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance 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 Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Shinkong Insurance go up and down completely randomly.
Pair Corralation between Central Reinsurance and Shinkong Insurance
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to under-perform the Shinkong Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Central Reinsurance Corp is 1.46 times less risky than Shinkong Insurance. The stock trades about -0.05 of its potential returns per unit of risk. The Shinkong Insurance Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,500 in Shinkong Insurance Co on November 2, 2024 and sell it today you would earn a total of 900.00 from holding Shinkong Insurance Co or generate 9.47% 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. Shinkong Insurance Co
Performance |
| Timeline |
| Central Reinsurance Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shinkong Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Central Reinsurance and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Shinkong Insurance
The main advantage of trading using opposite Central Reinsurance and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Shinkong 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance's long position.The idea behind Central Reinsurance Corp and Shinkong 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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