Correlation Between Central Reinsurance and Mitake Information
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Mitake Information 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 Mitake Information 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 Mitake Information, you can compare the effects of market volatilities on Central Reinsurance and Mitake Information 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 Mitake Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Mitake Information.
Diversification Opportunities for Central Reinsurance and Mitake Information
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Mitake is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Mitake Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitake Information 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 Mitake Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitake Information has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Mitake Information go up and down completely randomly.
Pair Corralation between Central Reinsurance and Mitake Information
Assuming the 90 days trading horizon Central Reinsurance Corp is expected to under-perform the Mitake Information. In addition to that, Central Reinsurance is 1.65 times more volatile than Mitake Information. It trades about -0.13 of its total potential returns per unit of risk. Mitake Information is currently generating about 0.4 per unit of volatility. If you would invest 6,280 in Mitake Information on August 31, 2024 and sell it today you would earn a total of 380.00 from holding Mitake Information 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. Mitake Information
Performance |
| Timeline |
| Central Reinsurance Corp |
| Mitake Information |
Central Reinsurance and Mitake Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Mitake Information
The main advantage of trading using opposite Central Reinsurance and Mitake Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Mitake Information 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 Mitake Information will offset losses from the drop in Mitake Information's long position.| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Fubon Financial Holding | Central Reinsurance vs. CTBC Financial Holding |
| Mitake Information vs. K Way Information | Mitake Information vs. Provision Information CoLtd | Mitake Information vs. Otsuka Information Technology | Mitake Information vs. Datavan 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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