Correlation Between Central Reinsurance and Alchip Technologies
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies, you can compare the effects of market volatilities on Central Reinsurance and Alchip Technologies 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 Alchip Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Alchip Technologies.
Diversification Opportunities for Central Reinsurance and Alchip Technologies
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Alchip is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Alchip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchip Technologies 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 Alchip Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchip Technologies has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Alchip Technologies go up and down completely randomly.
Pair Corralation between Central Reinsurance and Alchip Technologies
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to under-perform the Alchip Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Central Reinsurance Corp is 4.78 times less risky than Alchip Technologies. The stock trades about -0.1 of its potential returns per unit of risk. The Alchip Technologies is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 188,000 in Alchip Technologies on October 25, 2024 and sell it today you would earn a total of 125,000 from holding Alchip Technologies or generate 66.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Alchip Technologies
Performance |
| Timeline |
| Central Reinsurance Corp |
| Alchip Technologies |
Central Reinsurance and Alchip Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Alchip Technologies
The main advantage of trading using opposite Central Reinsurance and Alchip Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Alchip Technologies 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 Alchip Technologies will offset losses from the drop in Alchip Technologies' long position.| Central Reinsurance vs. Taiwan Semiconductor Manufacturing | Central Reinsurance vs. Evergreen Marine Corp | Central Reinsurance vs. Yang Ming Marine | Central Reinsurance vs. Wan Hai Lines |
| Alchip Technologies vs. Global Unichip Corp | Alchip Technologies vs. Asmedia Technology | Alchip Technologies vs. Silergy Corp | Alchip Technologies vs. Unimicron Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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