Correlation Between First Insurance and Simple Mart
Can any of the company-specific risk be diversified away by investing in both First Insurance and Simple Mart 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 Simple Mart 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 Simple Mart Retail, you can compare the effects of market volatilities on First Insurance and Simple Mart 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 Simple Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Simple Mart.
Diversification Opportunities for First Insurance and Simple Mart
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Simple is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Simple Mart Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simple Mart Retail 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 Simple Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simple Mart Retail has no effect on the direction of First Insurance i.e., First Insurance and Simple Mart go up and down completely randomly.
Pair Corralation between First Insurance and Simple Mart
Assuming the 90 days trading horizon First Insurance Co is expected to generate 2.15 times more return on investment than Simple Mart. However, First Insurance is 2.15 times more volatile than Simple Mart Retail. It trades about 0.4 of its potential returns per unit of risk. Simple Mart Retail is currently generating about 0.04 per unit of risk. If you would invest 2,295 in First Insurance Co on September 4, 2024 and sell it today you would earn a total of 215.00 from holding First Insurance Co or generate 9.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Simple Mart Retail
Performance |
| Timeline |
| First Insurance |
| Simple Mart Retail |
First Insurance and Simple Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Simple Mart
The main advantage of trading using opposite First Insurance and Simple Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Simple Mart 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 Simple Mart will offset losses from the drop in Simple Mart's long position.| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Chailease Holding Co | First Insurance vs. CTBC Financial Holding |
| Simple Mart vs. Taiwan Semiconductor Manufacturing | Simple Mart vs. Hon Hai Precision | Simple Mart vs. MediaTek | Simple Mart vs. Chunghwa Telecom 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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