Correlation Between First Insurance and Wistron Information
Can any of the company-specific risk be diversified away by investing in both First Insurance and Wistron Information 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 Wistron Information 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 Wistron Information Technology, you can compare the effects of market volatilities on First Insurance and Wistron Information 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 Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Wistron Information.
Diversification Opportunities for First Insurance and Wistron Information
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Wistron is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information 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 Wistron Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Information has no effect on the direction of First Insurance i.e., First Insurance and Wistron Information go up and down completely randomly.
Pair Corralation between First Insurance and Wistron Information
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.43 times more return on investment than Wistron Information. However, First Insurance Co is 2.3 times less risky than Wistron Information. It trades about 0.54 of its potential returns per unit of risk. Wistron Information Technology is currently generating about 0.18 per unit of risk. If you would invest 2,500 in First Insurance Co on November 28, 2024 and sell it today you would earn a total of 295.00 from holding First Insurance Co or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
First Insurance Co vs. Wistron Information Technology
Performance |
| Timeline |
| First Insurance |
| Wistron Information |
First Insurance and Wistron Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Wistron Information
The main advantage of trading using opposite First Insurance and Wistron Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Wistron Information 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 Wistron Information will offset losses from the drop in Wistron Information'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 |
| Wistron Information vs. Wistron Corp | Wistron Information vs. Wistron NeWeb Corp | Wistron Information vs. Pegatron Corp | Wistron Information vs. Dimerco Data System |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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