Correlation Between First Insurance and Chinese Maritime
Can any of the company-specific risk be diversified away by investing in both First Insurance and Chinese Maritime 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 Chinese Maritime 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 Chinese Maritime Transport, you can compare the effects of market volatilities on First Insurance and Chinese Maritime 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 Chinese Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Chinese Maritime.
Diversification Opportunities for First Insurance and Chinese Maritime
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Chinese is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra 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 Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of First Insurance i.e., First Insurance and Chinese Maritime go up and down completely randomly.
Pair Corralation between First Insurance and Chinese Maritime
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.45 times more return on investment than Chinese Maritime. However, First Insurance Co is 2.23 times less risky than Chinese Maritime. It trades about 0.2 of its potential returns per unit of risk. Chinese Maritime Transport is currently generating about 0.05 per unit of risk. If you would invest 2,270 in First Insurance Co on August 26, 2024 and sell it today you would earn a total of 165.00 from holding First Insurance Co or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Chinese Maritime Transport
Performance |
| Timeline |
| First Insurance |
| Chinese Maritime Tra |
First Insurance and Chinese Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Chinese Maritime
The main advantage of trading using opposite First Insurance and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime'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 |
| Chinese Maritime vs. Sunny Friend Environmental | Chinese Maritime vs. TTET Union Corp | Chinese Maritime vs. ECOVE Environment Corp | Chinese Maritime vs. Yulon Finance Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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