Correlation Between Central Reinsurance and United Radiant
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and United Radiant 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 United Radiant 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 United Radiant Technology, you can compare the effects of market volatilities on Central Reinsurance and United Radiant 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 United Radiant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and United Radiant.
Diversification Opportunities for Central Reinsurance and United Radiant
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and United is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and United Radiant Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Radiant 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 United Radiant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Radiant Technology has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and United Radiant go up and down completely randomly.
Pair Corralation between Central Reinsurance and United Radiant
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to under-perform the United Radiant. But the stock apears to be less risky and, when comparing its historical volatility, Central Reinsurance Corp is 1.86 times less risky than United Radiant. The stock trades about 0.0 of its potential returns per unit of risk. The United Radiant Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,900 in United Radiant Technology on October 13, 2024 and sell it today you would earn a total of 115.00 from holding United Radiant Technology or generate 6.05% 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. United Radiant Technology
Performance |
| Timeline |
| Central Reinsurance Corp |
| United Radiant Technology |
Central Reinsurance and United Radiant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and United Radiant
The main advantage of trading using opposite Central Reinsurance and United Radiant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, United Radiant 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 United Radiant will offset losses from the drop in United Radiant's long position.| Central Reinsurance vs. Mega Financial Holding | Central Reinsurance vs. ESUN Financial Holding | Central Reinsurance vs. Taiwan Cooperative Financial |
| United Radiant vs. Hung Sheng Construction | United Radiant vs. Sun Sea Construction | United Radiant vs. Pacific Construction Co | United Radiant vs. Sporton International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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