Correlation Between First Insurance and EnTie Commercial
Can any of the company-specific risk be diversified away by investing in both First Insurance and EnTie Commercial 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 EnTie Commercial 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 EnTie Commercial Bank, you can compare the effects of market volatilities on First Insurance and EnTie Commercial 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 EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and EnTie Commercial.
Diversification Opportunities for First Insurance and EnTie Commercial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and EnTie is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank 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 EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of First Insurance i.e., First Insurance and EnTie Commercial go up and down completely randomly.
Pair Corralation between First Insurance and EnTie Commercial
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.77 times more return on investment than EnTie Commercial. However, First Insurance Co is 1.31 times less risky than EnTie Commercial. It trades about 0.32 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about -0.04 per unit of risk. If you would invest 2,270 in First Insurance Co on August 25, 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. EnTie Commercial Bank
Performance |
| Timeline |
| First Insurance |
| EnTie Commercial Bank |
First Insurance and EnTie Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and EnTie Commercial
The main advantage of trading using opposite First Insurance and EnTie Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, EnTie Commercial 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 EnTie Commercial will offset losses from the drop in EnTie Commercial'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 |
| EnTie Commercial vs. Union Bank of | EnTie Commercial vs. Bank of Kaohsiung | EnTie Commercial vs. Taiwan Business Bank | EnTie Commercial vs. Chang Hwa Commercial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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