Correlation Between Central Reinsurance and Yufo Electronics
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Yufo Electronics 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 Yufo Electronics 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 Yufo Electronics Co, you can compare the effects of market volatilities on Central Reinsurance and Yufo Electronics 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 Yufo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Yufo Electronics.
Diversification Opportunities for Central Reinsurance and Yufo Electronics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Yufo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Yufo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yufo Electronics 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 Yufo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yufo Electronics has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Yufo Electronics go up and down completely randomly.
Pair Corralation between Central Reinsurance and Yufo Electronics
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 0.66 times more return on investment than Yufo Electronics. However, Central Reinsurance Corp is 1.52 times less risky than Yufo Electronics. It trades about 0.05 of its potential returns per unit of risk. Yufo Electronics Co is currently generating about 0.01 per unit of risk. If you would invest 2,285 in Central Reinsurance Corp on September 4, 2024 and sell it today you would earn a total of 310.00 from holding Central Reinsurance Corp or generate 13.57% 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. Yufo Electronics Co
Performance |
| Timeline |
| Central Reinsurance Corp |
| Yufo Electronics |
Central Reinsurance and Yufo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Yufo Electronics
The main advantage of trading using opposite Central Reinsurance and Yufo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Yufo Electronics 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 Yufo Electronics will offset losses from the drop in Yufo Electronics' long position.| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Chailease Holding Co | Central Reinsurance vs. CTBC Financial Holding |
| Yufo Electronics vs. Taiwan Semiconductor Manufacturing | Yufo Electronics vs. Yang Ming Marine | Yufo Electronics vs. AU Optronics | Yufo Electronics vs. Innolux 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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