Correlation Between First Insurance and Song Ho
Can any of the company-specific risk be diversified away by investing in both First Insurance and Song Ho 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 Song Ho 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 Song Ho Industrial, you can compare the effects of market volatilities on First Insurance and Song Ho 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 Song Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Song Ho.
Diversification Opportunities for First Insurance and Song Ho
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Song is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Song Ho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Ho Industrial 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 Song Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Ho Industrial has no effect on the direction of First Insurance i.e., First Insurance and Song Ho go up and down completely randomly.
Pair Corralation between First Insurance and Song Ho
Assuming the 90 days trading horizon First Insurance Co is expected to generate 2.09 times more return on investment than Song Ho. However, First Insurance is 2.09 times more volatile than Song Ho Industrial. It trades about 0.08 of its potential returns per unit of risk. Song Ho Industrial is currently generating about 0.0 per unit of risk. If you would invest 1,695 in First Insurance Co on November 30, 2024 and sell it today you would earn a total of 1,025 from holding First Insurance Co or generate 60.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
First Insurance Co vs. Song Ho Industrial
Performance |
| Timeline |
| First Insurance |
| Song Ho Industrial |
First Insurance and Song Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Song Ho
The main advantage of trading using opposite First Insurance and Song Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Song Ho 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 Song Ho will offset losses from the drop in Song Ho'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 |
| Song Ho vs. LandMark Optoelectronics | Song Ho vs. Elan Microelectronics Corp | Song Ho vs. Orient Semiconductor Electronics | Song Ho vs. WIN Semiconductors |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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