Correlation Between First Insurance and Unitech Computer
Can any of the company-specific risk be diversified away by investing in both First Insurance and Unitech 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 Unitech 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 Unitech Computer Co, you can compare the effects of market volatilities on First Insurance and Unitech 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 Unitech Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Unitech Computer.
Diversification Opportunities for First Insurance and Unitech Computer
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Unitech is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech 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 Unitech Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Computer has no effect on the direction of First Insurance i.e., First Insurance and Unitech Computer go up and down completely randomly.
Pair Corralation between First Insurance and Unitech Computer
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.56 times more return on investment than Unitech Computer. However, First Insurance Co is 1.79 times less risky than Unitech Computer. It trades about 0.29 of its potential returns per unit of risk. Unitech Computer Co is currently generating about -0.19 per unit of risk. If you would invest 2,430 in First Insurance Co on September 13, 2024 and sell it today you would earn a total of 125.00 from holding First Insurance Co or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Unitech Computer Co
Performance |
| Timeline |
| First Insurance |
| Unitech Computer |
First Insurance and Unitech Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Unitech Computer
The main advantage of trading using opposite First Insurance and Unitech Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Unitech 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 Unitech Computer will offset losses from the drop in Unitech 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 |
| Unitech Computer vs. First Insurance Co | Unitech Computer vs. Asia Electronic Material | Unitech Computer vs. Daxin Materials Corp | Unitech Computer vs. Advanced Echem Materials |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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