Correlation Between First Insurance and Grand Ocean
Can any of the company-specific risk be diversified away by investing in both First Insurance and Grand Ocean 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 Grand Ocean 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 Grand Ocean Retail, you can compare the effects of market volatilities on First Insurance and Grand Ocean 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 Grand Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Grand Ocean.
Diversification Opportunities for First Insurance and Grand Ocean
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Grand is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Grand Ocean Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Ocean 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 Grand Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Ocean Retail has no effect on the direction of First Insurance i.e., First Insurance and Grand Ocean go up and down completely randomly.
Pair Corralation between First Insurance and Grand Ocean
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.26 times more return on investment than Grand Ocean. However, First Insurance Co is 3.78 times less risky than Grand Ocean. It trades about 0.35 of its potential returns per unit of risk. Grand Ocean Retail is currently generating about 0.07 per unit of risk. If you would invest 2,295 in First Insurance Co on September 2, 2024 and sell it today you would earn a total of 190.00 from holding First Insurance Co or generate 8.28% 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. Grand Ocean Retail
Performance |
| Timeline |
| First Insurance |
| Grand Ocean Retail |
First Insurance and Grand Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Grand Ocean
The main advantage of trading using opposite First Insurance and Grand Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Grand Ocean 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 Grand Ocean will offset losses from the drop in Grand Ocean's long position.| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Fubon Financial Holding |
| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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