Correlation Between Central Reinsurance and Connection Technology
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Connection 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 Connection 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 Connection Technology Systems, you can compare the effects of market volatilities on Central Reinsurance and Connection 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 Connection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Connection Technology.
Diversification Opportunities for Central Reinsurance and Connection Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Connection is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Connection Technology Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connection 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 Connection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connection Technology has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Connection Technology go up and down completely randomly.
Pair Corralation between Central Reinsurance and Connection Technology
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 0.43 times more return on investment than Connection Technology. However, Central Reinsurance Corp is 2.31 times less risky than Connection Technology. It trades about -0.08 of its potential returns per unit of risk. Connection Technology Systems is currently generating about -0.15 per unit of risk. If you would invest 2,580 in Central Reinsurance Corp on October 25, 2024 and sell it today you would lose (20.00) from holding Central Reinsurance Corp or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Connection Technology Systems
Performance |
| Timeline |
| Central Reinsurance Corp |
| Connection Technology |
Central Reinsurance and Connection Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Connection Technology
The main advantage of trading using opposite Central Reinsurance and Connection Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Connection 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 Connection Technology will offset losses from the drop in Connection Technology's 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 |
| Connection Technology vs. Eagle Cold Storage | Connection Technology vs. Data International Co | Connection Technology vs. BenQ Materials Corp | Connection Technology vs. Trade Van Information Services |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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