Correlation Between Central Reinsurance and Voltronic Power
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Voltronic Power 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 Voltronic Power 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 Voltronic Power Technology, you can compare the effects of market volatilities on Central Reinsurance and Voltronic Power 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 Voltronic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Voltronic Power.
Diversification Opportunities for Central Reinsurance and Voltronic Power
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Central and Voltronic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Voltronic Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltronic Power Tech 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 Voltronic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltronic Power Tech has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Voltronic Power go up and down completely randomly.
Pair Corralation between Central Reinsurance and Voltronic Power
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 0.3 times more return on investment than Voltronic Power. However, Central Reinsurance Corp is 3.38 times less risky than Voltronic Power. It trades about -0.1 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about -0.07 per unit of risk. If you would invest 2,700 in Central Reinsurance Corp on October 25, 2024 and sell it today you would lose (140.00) from holding Central Reinsurance Corp or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Voltronic Power Technology
Performance |
| Timeline |
| Central Reinsurance Corp |
| Voltronic Power Tech |
Central Reinsurance and Voltronic Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Voltronic Power
The main advantage of trading using opposite Central Reinsurance and Voltronic Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Voltronic Power 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 Voltronic Power will offset losses from the drop in Voltronic Power'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 |
| Voltronic Power vs. Silergy Corp | Voltronic Power vs. Airtac International Group | Voltronic Power vs. Advantech Co | Voltronic Power vs. Sinbon Electronics Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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