Correlation Between Central Reinsurance and Sunnic Technology
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Sunnic Technology 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 Sunnic Technology 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 Sunnic Technology Merchandise, you can compare the effects of market volatilities on Central Reinsurance and Sunnic Technology 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 Sunnic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Sunnic Technology.
Diversification Opportunities for Central Reinsurance and Sunnic Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Sunnic is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Sunnic Technology Merchandise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunnic Technology 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 Sunnic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunnic Technology has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Sunnic Technology go up and down completely randomly.
Pair Corralation between Central Reinsurance and Sunnic Technology
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 0.48 times more return on investment than Sunnic Technology. However, Central Reinsurance Corp is 2.09 times less risky than Sunnic Technology. It trades about -0.2 of its potential returns per unit of risk. Sunnic Technology Merchandise is currently generating about -0.26 per unit of risk. If you would invest 2,705 in Central Reinsurance Corp on September 2, 2024 and sell it today you would lose (125.00) from holding Central Reinsurance Corp or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Sunnic Technology Merchandise
Performance |
| Timeline |
| Central Reinsurance Corp |
| Sunnic Technology |
Central Reinsurance and Sunnic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Sunnic Technology
The main advantage of trading using opposite Central Reinsurance and Sunnic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Sunnic Technology 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 Sunnic Technology will offset losses from the drop in Sunnic Technology's long position.The idea behind Central Reinsurance Corp and Sunnic Technology Merchandise 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.| Sunnic Technology vs. Taiwan Semiconductor Manufacturing | Sunnic Technology vs. MediaTek | Sunnic Technology vs. United Microelectronics | Sunnic Technology vs. Novatek Microelectronics Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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