Correlation Between First Insurance and De Licacy
Can any of the company-specific risk be diversified away by investing in both First Insurance and De Licacy 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 De Licacy 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 De Licacy Industrial, you can compare the effects of market volatilities on First Insurance and De Licacy 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 De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and De Licacy.
Diversification Opportunities for First Insurance and De Licacy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and 1464 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial 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 De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of First Insurance i.e., First Insurance and De Licacy go up and down completely randomly.
Pair Corralation between First Insurance and De Licacy
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.96 times more return on investment than De Licacy. However, First Insurance Co is 1.04 times less risky than De Licacy. It trades about 0.09 of its potential returns per unit of risk. De Licacy Industrial is currently generating about 0.06 per unit of risk. If you would invest 1,845 in First Insurance Co on September 4, 2024 and sell it today you would earn a total of 665.00 from holding First Insurance Co or generate 36.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. De Licacy Industrial
Performance |
| Timeline |
| First Insurance |
| De Licacy Industrial |
First Insurance and De Licacy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and De Licacy
The main advantage of trading using opposite First Insurance and De Licacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, De Licacy 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 De Licacy will offset losses from the drop in De Licacy's long position.| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Chailease Holding Co | First Insurance vs. CTBC Financial Holding |
| De Licacy vs. Tainan Enterprises Co | De Licacy vs. Nien Hsing Textile | De Licacy vs. Wisher Industrial Co | De Licacy vs. Tex Ray Industrial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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