Correlation Between First Insurance and Asustek Computer
Can any of the company-specific risk be diversified away by investing in both First Insurance and Asustek Computer 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 Asustek Computer 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 Asustek Computer, you can compare the effects of market volatilities on First Insurance and Asustek Computer 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 Asustek Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Asustek Computer.
Diversification Opportunities for First Insurance and Asustek Computer
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Asustek is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek Computer 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 Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of First Insurance i.e., First Insurance and Asustek Computer go up and down completely randomly.
Pair Corralation between First Insurance and Asustek Computer
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.58 times more return on investment than Asustek Computer. However, First Insurance Co is 1.74 times less risky than Asustek Computer. It trades about 0.35 of its potential returns per unit of risk. Asustek Computer is currently generating about 0.06 per unit of risk. If you would invest 2,240 in First Insurance Co on September 13, 2024 and sell it today you would earn a total of 315.00 from holding First Insurance Co or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Asustek Computer
Performance |
| Timeline |
| First Insurance |
| Asustek Computer |
First Insurance and Asustek Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Asustek Computer
The main advantage of trading using opposite First Insurance and Asustek Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Asustek Computer 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 Asustek Computer will offset losses from the drop in Asustek Computer'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 |
| Asustek Computer vs. AU Optronics | Asustek Computer vs. Innolux Corp | Asustek Computer vs. Ruentex Development Co | Asustek Computer vs. WiseChip Semiconductor |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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