Correlation Between First Insurance and China Metal
Can any of the company-specific risk be diversified away by investing in both First Insurance and China Metal 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 China Metal 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 China Metal Products, you can compare the effects of market volatilities on First Insurance and China Metal 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 China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and China Metal.
Diversification Opportunities for First Insurance and China Metal
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and China is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products 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 China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of First Insurance i.e., First Insurance and China Metal go up and down completely randomly.
Pair Corralation between First Insurance and China Metal
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.58 times more return on investment than China Metal. However, First Insurance Co is 1.72 times less risky than China Metal. It trades about 0.36 of its potential returns per unit of risk. China Metal Products is currently generating about -0.29 per unit of risk. If you would invest 2,340 in First Insurance Co on September 12, 2024 and sell it today you would earn a total of 215.00 from holding First Insurance Co or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. China Metal Products
Performance |
| Timeline |
| First Insurance |
| China Metal Products |
First Insurance and China Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and China Metal
The main advantage of trading using opposite First Insurance and China Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, China Metal 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 China Metal will offset losses from the drop in China Metal's long position.| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Fubon Financial Holding | First Insurance vs. Chailease Holding Co |
| China Metal vs. Tainan Spinning Co | China Metal vs. Lealea Enterprise Co | China Metal vs. China Petrochemical Development | China Metal vs. Ruentex Development 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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