Correlation Between Central Reinsurance and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Ligitek 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 Ligitek 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 Ligitek Electronics Co, you can compare the effects of market volatilities on Central Reinsurance and Ligitek 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 Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Ligitek Electronics.
Diversification Opportunities for Central Reinsurance and Ligitek Electronics
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Ligitek is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek 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 Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Central Reinsurance and Ligitek Electronics
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 0.32 times more return on investment than Ligitek Electronics. However, Central Reinsurance Corp is 3.1 times less risky than Ligitek Electronics. It trades about -0.21 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about -0.23 per unit of risk. If you would invest 2,700 in Central Reinsurance Corp on August 26, 2024 and sell it today you would lose (120.00) from holding Central Reinsurance Corp or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Ligitek Electronics Co
Performance |
| Timeline |
| Central Reinsurance Corp |
| Ligitek Electronics |
Central Reinsurance and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Ligitek Electronics
The main advantage of trading using opposite Central Reinsurance and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Ligitek 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Central Reinsurance vs. Insyde Software | Central Reinsurance vs. Meiloon Industrial Co | Central Reinsurance vs. Grand Ocean Retail | Central Reinsurance vs. Mercuries Life Insurance |
| Ligitek Electronics vs. Unique Optical Industrial | Ligitek Electronics vs. Powertech Industrial Co | Ligitek Electronics vs. Insyde Software | Ligitek Electronics vs. Central Reinsurance 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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