Correlation Between First Insurance and Dimension Computer
Can any of the company-specific risk be diversified away by investing in both First Insurance and Dimension Computer 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 Dimension Computer 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 Dimension Computer Technology, you can compare the effects of market volatilities on First Insurance and Dimension Computer 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 Dimension Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Dimension Computer.
Diversification Opportunities for First Insurance and Dimension Computer
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Dimension is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Dimension Computer Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimension Computer 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 Dimension Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimension Computer has no effect on the direction of First Insurance i.e., First Insurance and Dimension Computer go up and down completely randomly.
Pair Corralation between First Insurance and Dimension Computer
Assuming the 90 days trading horizon First Insurance is expected to generate 3.07 times less return on investment than Dimension Computer. But when comparing it to its historical volatility, First Insurance Co is 4.9 times less risky than Dimension Computer. It trades about 0.29 of its potential returns per unit of risk. Dimension Computer Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,460 in Dimension Computer Technology on September 13, 2024 and sell it today you would earn a total of 370.00 from holding Dimension Computer Technology or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Dimension Computer Technology
Performance |
| Timeline |
| First Insurance |
| Dimension Computer |
First Insurance and Dimension Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Dimension Computer
The main advantage of trading using opposite First Insurance and Dimension Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Dimension Computer 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 Dimension Computer will offset losses from the drop in Dimension Computer's long position.| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Fubon Financial Holding | First Insurance vs. Chailease Holding Co |
| Dimension Computer vs. RiTdisplay Corp | Dimension Computer vs. Eastern Media International | Dimension Computer vs. Newretail Co | Dimension Computer vs. Ching Feng Home |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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