Correlation Between First Insurance and Top Union
Can any of the company-specific risk be diversified away by investing in both First Insurance and Top Union 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 Top Union 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 Top Union Electronics, you can compare the effects of market volatilities on First Insurance and Top Union 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 Top Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Top Union.
Diversification Opportunities for First Insurance and Top Union
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Top is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Top Union Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Union Electronics 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 Top Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Union Electronics has no effect on the direction of First Insurance i.e., First Insurance and Top Union go up and down completely randomly.
Pair Corralation between First Insurance and Top Union
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.67 times more return on investment than Top Union. However, First Insurance Co is 1.5 times less risky than Top Union. It trades about 0.07 of its potential returns per unit of risk. Top Union Electronics is currently generating about 0.05 per unit of risk. If you would invest 1,650 in First Insurance Co on October 25, 2024 and sell it today you would earn a total of 880.00 from holding First Insurance Co or generate 53.33% 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. Top Union Electronics
Performance |
| Timeline |
| First Insurance |
| Top Union Electronics |
First Insurance and Top Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Top Union
The main advantage of trading using opposite First Insurance and Top Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Top Union 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 Top Union will offset losses from the drop in Top Union'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 |
| Top Union vs. First Insurance Co | Top Union vs. China Development Financial | Top Union vs. ESUN Financial Holding | Top Union vs. Hua Nan Financial |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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