Correlation Between Central Reinsurance and Excellence Optoelectronic
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Excellence Optoelectronic 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 Excellence Optoelectronic 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 Excellence Optoelectronic, you can compare the effects of market volatilities on Central Reinsurance and Excellence Optoelectronic 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 Excellence Optoelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Excellence Optoelectronic.
Diversification Opportunities for Central Reinsurance and Excellence Optoelectronic
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Central and Excellence is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic 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 Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Excellence Optoelectronic go up and down completely randomly.
Pair Corralation between Central Reinsurance and Excellence Optoelectronic
Assuming the 90 days trading horizon Central Reinsurance is expected to generate 4.54 times less return on investment than Excellence Optoelectronic. But when comparing it to its historical volatility, Central Reinsurance Corp is 3.91 times less risky than Excellence Optoelectronic. It trades about 0.06 of its potential returns per unit of risk. Excellence Optoelectronic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,510 in Excellence Optoelectronic on September 12, 2024 and sell it today you would earn a total of 325.00 from holding Excellence Optoelectronic or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Excellence Optoelectronic
Performance |
| Timeline |
| Central Reinsurance Corp |
| Excellence Optoelectronic |
Central Reinsurance and Excellence Optoelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Excellence Optoelectronic
The main advantage of trading using opposite Central Reinsurance and Excellence Optoelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Excellence Optoelectronic 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 Excellence Optoelectronic will offset losses from the drop in Excellence Optoelectronic's long position.| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Fubon Financial Holding | Central Reinsurance vs. Chailease Holding Co | Central Reinsurance vs. CTBC Financial Holding |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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