Correlation Between First Insurance and Taita Chemical
Can any of the company-specific risk be diversified away by investing in both First Insurance and Taita Chemical 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 First Insurance and Taita Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Insurance Co and Taita Chemical Co, you can compare the effects of market volatilities on First Insurance and Taita Chemical 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 First Insurance with a short position of Taita Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Taita Chemical.
Diversification Opportunities for First Insurance and Taita Chemical
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Taita is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Taita Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taita Chemical and First Insurance 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 First Insurance Co are associated (or correlated) with Taita Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taita Chemical has no effect on the direction of First Insurance i.e., First Insurance and Taita Chemical go up and down completely randomly.
Pair Corralation between First Insurance and Taita Chemical
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.66 times more return on investment than Taita Chemical. However, First Insurance Co is 1.5 times less risky than Taita Chemical. It trades about 0.07 of its potential returns per unit of risk. Taita Chemical Co is currently generating about -0.04 per unit of risk. If you would invest 1,695 in First Insurance Co on November 19, 2024 and sell it today you would earn a total of 825.00 from holding First Insurance Co or generate 48.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
First Insurance Co vs. Taita Chemical Co
Performance |
| Timeline |
| First Insurance |
| Taita Chemical |
First Insurance and Taita Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Taita Chemical
The main advantage of trading using opposite First Insurance and Taita Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Taita Chemical 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 Taita Chemical will offset losses from the drop in Taita Chemical's long position.| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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